Case Law Details
Hero Motocorp Limited Vs CCE & ST Gurugram (CESTAT Chandigarh)
In a recent legal battle, Hero Motocorp Limited found itself pitted against the Central Excise and Service Tax Commissionerate in Gurugram (CCE & ST Gurugram) at the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) in Chandigarh. The crux of the matter revolved around a demand for duty, interest, and penalties amounting to Rs. 5,12,692, a decision that has raised questions about its legality. In this article, we delve into the details of this case, analyzing the arguments presented by both parties and the final verdict.
Background of the Case: Hero Motocorp Limited, a prominent public limited company engaged in the manufacture and clearance of two-wheelers, found itself in the crosshairs of the authorities. The issue at hand stemmed from a show cause notice that demanded a duty of Rs. 5,12,692 in relation to goods exported on a ‘Free of Cost’ (FOC) basis. The period in question spanned from April 13, 2015, to March 23, 2017. In response to the notice, Hero Motocorp filed a detailed reply, but the original authority upheld the entire demand, including interest and penalties.
The Appellant’s Argument: Hero Motocorp, through its counsel, contended that the impugned order lacked legal standing. They argued that they had exported the goods in strict adherence to the provisions and procedures laid out in Rule 19 of the Central Excise Rules, 2002, in conjunction with Notification No. 42/2002-CE(N.T.) dated June 26, 2001. Notably, there were no specific conditions in the notification or Rule 19 mandating the receipt of foreign currency for FOC exports. The appellant asserted that there was no restriction on availing Cenvat Credit for inputs, input services, and capital goods used in the export of goods, even in the case of FOC exports. Importantly, they claimed that the Department had never disputed the proper manner of exports either during the export process or when documents were submitted to the Central Excise Department. Hero Motocorp further argued that the reliance on RBI Master Circular No. 14/2012-13 dated July 2, 2012, by the Commissioner (Appeals) was unfounded, as such circulars primarily pertain to exchange control-related procedures, and cannot be applied to interpret Central Excise exemption notifications and procedures. They emphasized that the Central Excise Act, Central Excise Rules, and relevant notifications governed the levy and exemption of Central Excise duty on export transactions.
The Department’s Position: On the other side, the Department reiterated the findings of the impugned order, claiming that Hero Motocorp had violated procedures and master circulars issued by the RBI in exporting the goods. They argued that the appellant had failed to submit supporting documents or evidence to the lower adjudicating authority to prove that the goods were sent as samples or for testing or repairing purposes, nor had they submitted any GR waiver.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
