The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) denied the benefit of concessional excise duty under Notification citing the company used imported consumables rather than domestically sourced raw materials which made them ineligible.
Indoworth India Ltd., the appellant, is engaged in the manufacture of Wool Yarn of various types, classified under Chapters 51 & 55 of the Central Excise Tariff Act, 1985. During the period July 2010 to October 2010, the appellant cleared finished goods from its factory at a concessional rate of duty, claiming exemption under the said notification.
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The Central Excise Department objected to the concessional duty because the appellant did not fulfill the mandatory conditions under the notification. Specifically, the department argued that the appellant used imported consumables instead of domestically sourced raw materials, as required under Condition No. 3 of the notification. A show cause notice was issued, leading to an adjudication order dated 02.01.2013, confirming the demand for excise duty along with interest and penalty.
On appeal, the Commissioner of Central Excise (Appeals) upheld the demand and dismissed the appellant’s challenge vide order dated 22.07.2013. Aggrieved by this decision, the appellant approached the CESTAT.
The appellant argued that it was entitled to the concessional duty rate, as the imported inputs used in manufacturing were integral to the final product and should qualify as raw materials under the notification.
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The revenue countered that Notification No. 23/2003-C.E. explicitly required raw materials to be domestically sourced, and the appellant’s failure to meet this condition made them ineligible for concessional duty. The department contended that the use of imported inputs violated the statutory provisions, justifying the duty demand and penalties imposed.
The two-member bench comprising S.K. Mohanty ( Judicial Member ) and M.M. Parthiban ( Technical Member ) observed that the appellant was not interested in pursuing the appeal, as evidenced by multiple absences from hearings on 12.07.2023, 04.10.2023, 15.12.2023, 15.04.2024, 05.07.2024, and 01.10.2024, despite being served notices. Due to the lack of participation, the tribunal proceeded ex-parte based on the available records and arguments from the revenue.
The tribunal held that the denial of concessional duty was justified, as the appellant failed to meet the domestic sourcing requirement of the notification. The appeal was dismissed.
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