The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Chennai Bench observed that the demand of excise duty for semi-finished goods is invalid.
The appellants, M/s. Blue Mount Textiles, M/s. Sri Gugan Mills and M/s. Kadri Wovens were 100% Export Oriented Unit (EOU) for the purpose of manufacturing of excisable goods. They procured imported capital goods and raw materials without payment of duty under Notification No. 52/2003-Cus. dated 31.03.2003 and procured indigenous excisable goods (capital goods, spares, raw material, fuel, etc.) without payment of duty under Notification No. 22/2003-C.Ex. dated 31.03.2003.
The appellants then filed a refund claim on the ground that they had paid an excess amount of duty. The plea on the part of the appellants was that they are eligible to pay duty on the manufactured items only as per Sl. No. 2 of Notification No. 23/2003-C.E. dated 31.03.2003. After due process of law, the refund sanctioning authority rejected the refund claims observing that the tax paid by the appellants is correct and that there is no excess payment to be refunded.
On behalf of the appellants, S. Durairaj submitted that the goods were in the nature of semi-finished goods, work-in-progress and finished goods; no duty is required to be paid on such goods for the reason that semi-finished goods / work-in-progress goods have not completed the stage of manufacture so as to attract the levy; all goods were exported. Therefore, the entire duty is refundable.
“To be de-bonded goods” have to be considered as ‘goods manufactured in an EOU and brought to any other place in India’. Because of this reason, the appellants had calculated the duty liability on the basis of the proviso to Section 3(1) read with Sl. No. 2 of Notification No. 23/2003-C.E. by duly taking into account 50% of the Customs Duty.
M. Ambe, the Authorized Representative for the respondent, supported the findings in the impugned order. It is submitted by the Department that the appellants have paid the duty in accordance with the provisions of law and that there is no excess payment for granting a refund.
The Tribunal of Sulekha Beevi C.S, Judicial Member and Vasa Seshagiri Rao, Technical Member observed that “In the case of M/s. EID Parry India Ltd, it was held that the demand of duty in respect of semifinished goods cannot sustain. After appreciating the facts and following the ratio laid down in the above decisions, we are of the view that the rejection of refund is without any legal or factual basis.”
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