The Kolkata bench of the Customs, Excise And Service Tax Appellate Tribunal ( CESTAT ) held that the excise duty is not applicable on imported Zinc Oxide used in manufacturers of Pre-Calcined Ferrite Power ( Spray Dried ) ( PCFP ). The Tribunal viewed that the benefit of Notification No.25/1999-Cus dated 28.02.1999 as amended by Notification No.26/2002-Cus dated 01.03.2002 exempts Basic Customs Duty on imported Zinc Oxide which has been used in the manufacture of PCFP.
M/s. EPCOS India Limited, the appellant is a manufacturer of ‘Ferrites, Soft Ferrites Component/Parts and Soft Ferrite Powder. To undertake the manufacture of the aforesaid item, the appellant imported Zinc Oxide ( 99% purity ), Manganese Oxide, Polyvinyl Alcohol etc.. The appellant imported Zinc Oxide by availing exemption provided vide Sl. No.148 of list A of Notification No.25/1999Cus dated 28.02.1999 as amended by Notification No.26/2002-Cus dated 01.03.2002.
According to the said Notification, the Basic Customs Duty ( BCD ) on the import of Zinc Oxide would be Nil, provided that the imported Zinc Oxide is used for the manufacture of Pre-Calcined Ferrite Power ( Spray Dried ) ( PCFP ). Further, as required under the Notification, the appellant had obtained the necessary registration under Customs ( Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods ) Rules, 1996.
The appellant used the imported Zinc Oxide for manufacturing PCFP, some portion of which was cleared by the appellant into the open market, but the remaining part of the PCFP was used captively to manufacture Ferrite Cores. Such manufacture of Ferrite Cores was cleared for export. During the audit, the appellant wrote a letter dated 08.12.2009 explaining their activity and stated that they do not produce PCFP, but the same was rectified by the appellant vide their letter dated 18.03.2010 in which they clarified that they manufactured PCFP during the impugned period.
The appellant submitted that during investigation it was found by the jurisdictional authorities of the appellant that the appellant is manufacturing PCFP by using imported Zinc Oxide. Merely on the letter given by the appellant which was further rectified, the demand cannot be confirmed against the appellant. It is further submitted that the PCFP manufactured by using imported Zinc Oxide was sold in the open market as well as used in further manufacture of excisable goods which has been cleared on payment of duty. The benefit of Notification No.25/1999-Cus dated 28.02.1999 as amended by Notification No.26/2002-Cus dated 01.03.2002 cannot be denied to the appellant.
A two-member bench of Shri Ashok Jindal, Member( Judicial ) and Shri K Anpazhakan, Member( Technical ) held that the appellant is entitled to claim the benefit of Notification No.25/1999-Cus dated 28.02.1999 as amended by Notification No.26/2002-Cus dated 01.03.2002, which exempts Basic Customs Duty on imported Zinc Oxide which has been used in the manufacture of PCFP.
While allowing the appeal, the CESTAT set aside the impugned order. Shri B.L. Narasimhan, Rahul Tangri and Vasudev A. appeared for the Appellant (s). Shri Ashwini K. Choudhary, Authorized Representative appeared for the Revenue.
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