Case Law Details
IPCA Laboratories Ltd Vs C.C.E. & S.T. (CESTAT Ahmedabad)
CESTAT find that the dispute relates to demand of duty on the semi-finished goods/ work in process goods during the debonding of EOU. We find that as per the details submitted by the appellant which is not in dispute, the semi-finished goods/ work in process was not in fully manufactured form and the same was at different stages of the manufacturing process. The said goods are not marketable as such which were subjected to various other processes to attain the stage of final product, therefore, at the semi-finished stage, where no excisable goods came into existence, the demand of duty at the time of debonding is, in our view, incorrect in law. In any case, these semi-finished goods/ work in process will reach to the stage of final product and the same is liable for duty at the time of clearance from the factory. Therefore, at the intermediate stage when the goods are not fully manufactured, the excise duty was not payable at the time of debonding, particularly when the goods were not cleared from the factory and were in the process of manufacturing. This issue is no longer res integra as the same stand decided by CESTAT Bangalore in the case of Tirumala Seung Han Textiles Ltd. (supra) Wherein the following order was passed.
“5.1 In respect of in-process goods, the appellants have argued that there is no authority for demanding duty. As per Para 6.18 of the Foreign Trade Policy 2004-09, an EOU may opt out of the scheme with the approval of the Development Commissioner subject to the payment of Excise Duty. In the policy, only imported and indigenous capital goods, raw materials, components, consumables, spares and finished goods in stock are mentioned. There is no mention about the in-process goods. In the absence of the mention of the in-process goods in the policy, there is no authority for demanding duty on the in-process goods. Hence, we set aside the demand of duty on the in-process goods.”
The above decision of the Tribunal was upheld by dismissing the department’s Central Excise Appeal No. 142 of 2010 by Hon’ble Andhra Pradesh High Court reported at 2016 (3) TMI 1317 (HC-AP)
In view of above judgements, the issue has been decided that no duty can be demanded on semi-finished goods/ work in process, lying at the time of debonding of 100% EOU.
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