Biocon Limited Vs Commissioner of Central Tax (CESTAT Bangalore)
Brief facts leading to the present dispute, inter alia, are that the appellant is a 100% Export Oriented Unit (EOU); that the appellant had procured raw materials/inputs for the purpose of manufacture and export of its final products; that the importation of raw materials were allowed duty-free by virtue of Notification No.52/2003-CUS dated 31.03.2003; that the appellant had also procured certain indigenously manufactured goods duty-free as per Notification No.22/2003-CE dated 31.03.2003; that the obvious purpose of these procurements of duty-free raw materials were for the manufacture of specified final product and the export thereon; and that certain quantity of such raw materials had become obsolete and unusable. This prompted the appellant to request the jurisdictional authorities for destruction of the same; that the Revenue insisted for the payment of duty involved which was paid by the appellant and only thereafter, the duty-free raw materials were destroyed under respective Mahazars, and that on 12.10.2012 & 14.04.2014 the appellant filed its claims for refund of the duty paid for the two periods involved, on the ground that the same was paid wrongly.
Revenue issued a show cause notice proposing to reject the above refund claims, which was seriously contested vide appellant’s reply thereto, but however, the said claims of the appellant were rejected vide respective Orders-in-Original against which the appeals were filed before the First Appellate Authority. The First Appellate Authority also having rejected the appeals of the assessee, the appellant has assailed the same in these appeals.
Held by CESTAT: The perusal of the orders of the lower authorities does not allege that the appellant had not fulfilled the export obligation and accordingly, the ratio in the Saint Gobin Crystals (supra) of this Bench squarely applies. Moreover, the Notification No. 52 ibid as amended by Notification Nos. 30 and 34 ibid clearly prescribe vide new Condition No.8 which is extracted elsewhere in this order that no duty shall be leviable if raw material is destroyed within the unit after intimation to the Customs authorities. A conjoint reading of the amended Notifications as well as the ratio laid down in the case of Saint Gobin Crystals (supra), leads to the only possible inference that the Revenue authorities have erred in demanding payment of duty and consequently, the appellant is entitled for refund of the same.
FULL TEXT OF THE CESTAT BANGALORE ORDER
These two appeals are filed by the assessee against the Orders –in-Appeal No.227/2013 and 39/2015/LTU respectively passed by the Commissioner (Appeals), LTU, Bangalore, dated 20.11.2013 & 23.03.2015 but however, since common facts and issue are involved, they are taken up for common disposal for convenience. When the matter was taken up for hearing, learned Authorized Representative Sh. P.Gopakumar, Joint Commissioner, at the outset contended that the issue involves interpretation of Notifications and hence, these are to be only heard before the Division Bench of CESTAT.
2. Per Contra, Sh. N.Anand, learned Advocate, points out that the issue pertains only to the post-importation procedure and nothing to do with the interpretation of any Notifications and as such, the Single Member Bench of the CESTAT has jurisdiction. He also draws attention to the Miscellaneous Order No.20284 in the appellant’s case dated 03.09.2021 wherein, the Division Bench of this CESTAT has after examination of records, directed the Registry to list the appeals before the Single Member Bench. It is therefore, clear that by the pleadings of the learned Advocate as well as the Miscellaneous Order, the Single Member Bench of the CESTAT has been conferred with the jurisdiction to dispose of these appeals.
3. Brief facts leading to the present dispute, inter alia, are that the appellant is a 100% Export Oriented Unit (EOU); that the appellant had procured raw materials/inputs for the purpose of manufacture and export of its final products; that the importation of raw materials were allowed duty-free by virtue of Notification No.52/2003-CUS dated 31.03.2003; that the appellant had also procured certain indigenously manufactured goods duty-free as per Notification No.22/2003-CE dated 31.03.2003; that the obvious purpose of these procurements of duty-free raw materials were for the manufacture of specified final product and the export thereon; and that certain quantity of such raw materials had become obsolete and unusable. This prompted the appellant to request the jurisdictional authorities for destruction of the same; that the Revenue insisted for the payment of duty involved which was paid by the appellant and only thereafter, the duty-free raw materials were destroyed under respective Mahazars, and that on 12.10.2012 & 14.04.2014 the appellant filed its claims for refund of the duty paid for the two periods involved, on the ground that the same was paid wrongly.
4. Revenue issued a show cause notice proposing to reject the above refund claims, which was seriously contested vide appellant’s reply thereto, but however, the said claims of the appellant were rejected vide respective Orders-in-Original against which the appeals were filed before the First Appellate Authority. The First Appellate Authority also having rejected the appeals of the assessee, the appellant has assailed the same in these appeals.
5. Heard Sh. N.Anand, learned Advocate for the appellant and Sh. P.Gopakumar, learned Authorized Representative for the Respondent, have gone through the documents placed on record as well as the decisions/orders relied upon during the course of arguments.
6. The import of duty-free raw materials was made with a purpose to manufacture and export the final products. It is the case of the appellant that both the Notifications in question, viz., Notification No.52/2003-CUS dated 31.03.2003; ibid and Notification No.22/2003-CE dated 31.03.2003 ibid were amended vide Notification Nos. 34/2015 and 30/2015 both dated 25.05.2015, wherein Condition No.8 of the Notification No.52 ibid was substituted by new Condition No. 8, which reads as under:
“(8) Subject to the satisfaction of the said officer, duty shall not be leviable in respect of capital goods, raw material, consumables, spares, goods manufactured, processed or packaged and scrap or waste or remnants or rejects are destroyed within the unit after intimation to Customs authorities or destroyed outside the unit with permission of Customs authorities:
Provided that this condition shall not apply in case of unit engaged in manufacture and export of gold, silver, platinum, diamond, precious and semi-precious stones.”
7. The said substituted Condition is not absolute but however, is subject to the satisfaction of the said officer. The appellant has also relied on Foreign Trade Policy-2009-2014 to the extent relating to sale of unutilized material which is covered under Paragraph 6.15 of the said Policy. The effect of the said Paragraph is that an EOU can dispose of unutilized goods and services, imported or procured from DTA, with the approval of the Custom authorities without payment of duties. They have also relied upon the following decisions in support of their claim:
