Sterling Generators Pvt Limited (EOU) Vs Commissioner CGST & Central Excise (CESTAT Ahmedabad)
Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad Bench, has allowed the appeals filed by Sterling Generators Pvt Limited (a 100% Export Oriented Unit – EOU) and its authorized signatory, Shri Nagendra Singh. The Tribunal set aside the demand for Customs duty, interest, and penalties that had been confirmed by lower authorities, primarily on the grounds that the extended period of limitation for issuing the show cause notice was not applicable.
Sterling Generators Pvt Limited is an EOU engaged in the manufacture of Diesel Generating (DG) sets. The company held a license as a private bonded warehouse under Section 58 of the Customs Act, 1962, and permission to manufacture in bond under Section 65 of the same Act, supported by a B-17 bond of Rs. 20 Crores with the department.
The dispute originated from an audit by the Central Excise Revenue Audit (CERA), Ahmedabad, which observed that Sterling Generators had imported/procured DG sets from an SEZ unit and also from M/s. Powerica Limited, another 100% EOU in Bangalore. CERA’s objection was that while the company had a Letter of Permission (LoP) for manufacturing DG sets, it appeared to have imported/procured and sold these DG sets without undertaking any authorized manufacturing activity. Although the Letter of Intent (LoI) mentioned “re-engineering,” CERA contended that an EOU required specific approval from the Board of Approval (BOA) for such activities, and merely mentioning it in the LoI did not make it a permissible activity.
