The Ahmedabad bench of the Customs, Excise And Service Tax Appellate Tribunal ( CESTAT ) held domestic manufacturers cannot be expected to comply with conditions that are required to be imposed on importers and set aside the demand of duty alleging wrongful availment of exemption.
Aci Industrial Organic Pvt Ltd, the Appellant M/s ACI Industries are engaged in the manufacture and clearance of excisable goods falling under Chapter 29 of the Central Excise Tariff Act, 1985. They were also availing Cenvat Credit under provisions of the CENVAT Credit Rules, 2004. The basic issue in both the appeals are that the Appellants had cleared field chemicals viz ‘Di -ethylene Tri Amine Pentad Acetic Acid ( DTPA ) and Di – Sodium ( EDTA ) to ONGC for their petroleum operations under International Competitive Bidding by availing exemption from payment of Central Excise duty in terms of Sr. No. 336 read with condition–41 of Notification No. 12/2012 –CE dated 17.03.201.
The Department alleged that based on conditions required under Customs Notification No. 12/2012–Customs dated 17.03.2012, the Appellant have wrongfully availed benefits under the Central Excise Notification.
Shri A X S Jiwan, Consultant for the appellant submitted that the relevant Customs Notification No. 12/2012 – Customs dated 17.03.2012 vide entry No. 356 and condition – 41 read with List–13 allows exemption to all goods of any chapter supplied against ‘International Competitive Bidding” and that such goods cleared under International Competitive Bidding should be exempted from Customs duties when imported to India.
It was also submitted that the Department has not raised any objections in so far as the supplies of goods to ONGC under international competitive biddings is concerned however the Department has raised objections with regards to the Appellant being a sub – contractor of ONGC and thus alleged that the Appellant has wrongly availed exemption by not fulfilling the conditions prescribed under Customs Notifications for the importers.
It was submitted that the Appellant being domestic suppliers are not obligated to fulfill conditions specific for importers. The appellant submitted that the Adjudicating Authority has travelled beyond the Show Cause Notice while re–adjudicating the case. Shri Ajay. K. Samota, Superintendent ( AR ) appearing on behalf of the Department reiterated findings of the impugned order.
A division bench of Mr Ramesh Nair, Member ( Judicial ) and Mr C L Mahar, Member ( Technical ) held that the Appellant are eligible for exemption under Central Excise Notification under Notification No. 12/2012 –CE upon fulfilling all conditions stipulated therein, thus sufficiently establishing that the goods dealt with by the Appellants qualify for exemption.
It was found by the Tribunal that the department’s allegation that the Appellant has wrongfully availed exemption has no basis as demand has been confirmed demand on an insignificant issue as domestic manufacturers cannot be expected to comply with such conditions that are required to be imposed on importers. Therefore, the appeal succeeds on merits.
The CESTAT set aside the impugned orders and allowed the appeals.
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