Case Law Details
Piramal Enterprises Limited Vs Commissioner of GST & Central Excise (CESTAT Chennai)
In a recent ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Chennai has allowed Piramal Enterprises Limited to claim remission of customs duty on imported raw materials that were destroyed in a fire accident at its 100% Export Oriented Unit (EOU) in 2010. The Tribunal’s decision, pronounced on June 6, 2025, underscores that the fulfillment of conditions stipulated in customs exemption notifications is not applicable when imported goods are destroyed by unforeseen circumstances.
Piramal Enterprises, engaged in the manufacture of organic compounds, had imported Ammonium Persulphate under Bills of Entry dated January 18, 2010, and June 21, 2010. The company was operating as an EOU and availing benefits under Customs Notification No. 52/2003-Cus. and Central Excise Notification No. 22/2003-C.Ex., both dated March 31, 2003, for duty-free procurement of raw materials and capital goods.
Tragedy struck on July 9, 2010, when a fire accident at the EOU destroyed the imported Ammonium Persulphate. Following the incident, Piramal Enterprises sought remission of the customs duty paid on these imports. While the customs duty had been reimbursed by their insurer, the company had paid Anti-Dumping Duty (ADD) under protest and subsequently sought its refund.
The initial adjudication by the Order-in-Original No. 85/2012, dated December 31, 2012, rejected the refund claim. It also ordered the payment of interest amounting to Rs. 85,740 on the delayed ADD payment and imposed a penalty of Rs. 10,000 under Section 117 of the Customs Act, 1962, read with Section 72 of the Act.
Piramal Enterprises appealed this decision. The First Appellate Authority, vide Order-in-Appeal No. 78/2014 (M-I) dated October 13, 2014, upheld the demand for interest but set aside the penalty. Dissatisfied with this partial relief, the company escalated the matter to CESTAT Chennai.
During the CESTAT proceedings, the core argument from the department was that since the imported goods were destroyed by fire, the conditions stipulated in Notification No. 52/2003-Cus., which granted duty exemption, had not been fulfilled. Consequently, the department argued that Piramal Enterprises was not eligible for the customs duty exemption, nor for exemption from ADD as per Notification No. 5/1994-Cus., which relied on the goods being wholly exempt from customs duty.
Piramal Enterprises, through its counsel, brought attention to Section 9A(2A) of the Customs Tariff Act, 1975. This provision, both prior to and after its amendment on March 28, 2021, specifies that anti-dumping duty shall not apply to articles imported by a 100% EOU unless: (i) it is specifically made applicable in the notification; or (ii) such article is either cleared as such into the Domestic Tariff Area (DTA) or used in the manufacture of any goods cleared into the DTA.
Judicial Precedent and Reasoning:
A crucial aspect of the CESTAT’s decision was its reliance on a previous ruling by a Co-ordinate Bench of the Tribunal in Piramal Enterprises’ own case (Final Order No. 41129/2023 in Appeal E/41296/2014, dated December 19, 2023). This earlier order, dealing with remission of duty due to the same fire accident, had already established a precedent.
The Co-ordinate Bench had specifically noted that Notification No. 96/2007-Cus. dated August 29, 2007, which imposed the ADD, did not explicitly state its applicability to EOU/SEZ units. Furthermore, the second condition of Section 9A(2A) — the clearance of goods into DTA as such or after manufacturing into goods for DTA clearance — was clearly not met, as the goods were destroyed by fire. Therefore, there was no occasion for them to be cleared into the DTA.
The Tribunal in the prior ruling stated, “The goods imported were destroyed in fire and therefore, there is no requirement to look into the fulfillment of the conditions of Notification No.52/2003 dated 31.03.2003. We find that the appellant is eligible for remission of duty. Having been paid under protest, the appellant is eligible for refund.”
Respectfully following this established precedent, the current CESTAT Chennai bench concluded that since the imported goods were destroyed, the conditions for exemption under Notification No. 52/2003-Cus. or for the applicability of ADD under Notification No. 5/1994-Cus. (which depended on the exemption under 52/2003-Cus.) could not be reasonably expected to be fulfilled. The Tribunal therefore allowed Piramal Enterprises’ appeal, granting consequential benefits as per law. This decision provides relief to the company and clarifies the applicability of customs duty exemptions in cases of accidental destruction of imported goods within EOUs.
FULL TEXT OF THE CESTAT CHENNAI ORDER
The appellant is a 100 % EOU engaged in the manufacture of organic compounds. They were availing the benefits of Notification No.52/2003-Cus. dated 31.03.2003 and Notification No.22/2003-C.Ex dated 31.03.2003 for procurement of raw materials and capital goods.
2. The Ammonium Persulphate imported by the Appellant vide two Bills of Entry dated 18.01.2010 and 21.06.2010 was destroyed in a fire accident that occurred in the Appellant’s Export Oriented Unit (EOU) on 09.07.2010. The Appellant thus sought remission of the Customs Duty paid on these imports. The Appellant paid Anti Dumping Duty (ADD) under protest and sought refund thereof. As the Customs Duty paid had been reimbursed by the Appellant’s insurer, the claim for refund was restricted to the ADD.
3. By the Order-in-Original No.85/2012 dated 31.12.2012 this claim for refund was rejected and also ordered for payment of interest amount of Rs.85,740/- on the delayed payment of ADD as well as imposed penalty of Rs.10000/-under Section 117 of the Customs Act, 1962 read with Section 72 of the Act. On appeal, the First Appellate Authority vide OIA No. 78/2014 (M-I) dated 13.10.2014 upheld the demand of interest; however set aside the penalty. Aggrieved by this order, the present appeal has been filed before us.
4. Having heard submissions on behalf of the parties, we find that the identical issue came up for consideration before a Co-Ordinate Bench of this Tribunal in relation to the remission of duty owing to same fire by accident in appellant’s own case vide Final Order No.41129/2023 (in Appeal E/41296/2014) dated 19.12.2023. The relevant portions of that order are reproduced below:
“4. Heard both sides.
5. It needs to be stated that the refund claim though preferred for Rs.10,79,768/- and interest of Rs.12,832/-, the claim in this appeal is limited to refund of Rs.8,55,993/-, being the ADD paid by the appellant. It is submitted by the appellant that the insurance company, reimbursed the customs duty (excluding the anti-dumping duty) and therefore, they are not claiming for refund of Rs.2,23,775/-and interest of Rs.12,832/- being customs duty paid by them.
5.1 The appellant has enclosed a letter dated 27.04.2011, which shows that the anti-dumping duty has been paid by them under protest. The Show Cause Notice dated 08.11.2011, alleges that as the goods were imported duty free under Notification No.52/2003 CUS dated 31.03.2003 and were destroyed by fire, the conditions stipulated in the notification no.52/2003 dt.31.03.2003 have not been fulfilled by the appellant and therefore, the appellant is not eligible to claim exemption under Notification No.52/2003 dated 31.03.2003. It is also the view of the department that for the same reason the appellant is not eligible for exemption from ADD, as per Notification No.5/1994 CUS dated 18.11.1994, in as much as the goods imported were not wholly exempted from payment of customs duty for the reason that the appellant did not satisfy the conditions stipulated under Notification No.52/2003 CUS dated 31.03.2003.
5.2 The Learned Counsel has adverted to Section 9A (2A) of Customs Tariff Act, 1975 which reads as under:
Prior to 28.03.2021
[(2A) Notwithstanding anything contained in sub-section (1) and subsection (2), a notification issued under sub-section (1) or any anti-dumping duty imposed under sub-section (2), shall not apply to articles imported by a hundred percent, export-oriented undertaking unless,: –
i. specifically made applicable in such notifications or such impositions, as the case may be; or
ii. the article imported is either cleared as such into the domestic tariff area or used in the manufacture of any goods that are cleared into the domestic tariff area, and in such cases anti-dumping duty shall be levied on that portion of the article so cleared or so used as was leviable when it was imported into India.
Explanation – For the purposes of this sub-section, the expression “hundred percent export-oriented undertaking” shall have the meaning assigned to it in Explanation 2 to sub-section (1) of section 3 of the Central Excise Act, 1944; (1 of 1944)].”
After 28.03.2021
[(2A) Notwithstanding anything contained in sub-section (1) and subsection (2), a notification issued under sub-section (1) or any antidumping duty imposed under sub-section (2) shall not apply to articles imported by a hundred percent export oriented undertaking or a unit in a special economic zone, unless : –
(i) it is specifically made applicable in such notification or to such undertaking or unit; or
(ii) such article is either cleared as such into the domestic tariff area or used in the manufacture of any goods that are cleared into the domestic tariff area, in which case, anti-dumping duty shall be imposed on that portion of the article so cleared or used; as was applicable when it was imported into India.
Explanation – For the purposes of this section: –
a. the expression “hundred percent export-oriented undertaking” shall have the same meaning as assigned to it in clause (i) of Explanation 2 to subsection (1) of section 3 of the Central Excise Act, 1944 (1 of 1944.);
b. the expression “special economic zone” shall have the same meaning as assigned to it in clause (za) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005.)]
5.3 The above provision of law as it stood prior to 28.03.2021, as well as after the said date, provides that the anti-dumping duty shall not apply to articles imported by 100% EOU or a unit in a Special Economic Zone, unless it is specifically made applicable in the notification.
5.4 In the present case, Notification No.96/2007 CUS dated 29.08.2007, which imposes the levy of anti-dumping duty on the goods does not make any mention that it is specifically made applicable to EOU/SEZ. The second condition is that the goods imported are either cleared as such into DTA or used in the manufacture of any goods that are cleared into the DTA. The goods having been destroyed in fire, there is no occasion of the goods cleared as such into DTA or used in the manufacture of finished products for clearance into DTA.
5.5 The department has relied upon Notification No.5/1994 CUS dated 18.11.1994. The said notification also states that only if the goods are cleared as such into DTA or used for manufacture of finished products and are cleared into DTA, the exemption of the notification would become ineligible.
5.6 The goods imported were destroyed in fire and therefore, there is no requirement to look into the fulfilment of the conditions of Notification No.52/2003 dated 31.03.2003. We find that the appellant is eligible for remission of duty. Having been paid under protest, the appellant is eligible for refund.
5.7 In the result, the impugned order is set aside. The appeal is allowed with consequential reliefs, if any.”
5. Respectfully following the order of the Co-Ordinate Bench (supra), this appeal is allowed with consequential benefits, if any, as per law.
(Order pronounced in open court on 06.06.2025 )
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