Imported Raw Materials for manufacturing mobiles & tablets Eligible for BCD Exemption on DTA Clearance: CESTAT grants Relief to Samsung India Electronics
Tribunal noted that if goods are fully exempt from Basic Customs Duty by a notification, the duty must be considered nil when calculating Central Excise Duty on DTA clearances, even if they don’t meet the conditions in para 6.8 of the Foreign Trade Policy
The Allahabad bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) held thatimported raw materials are eligible for basic customs duty exemption on DTA (Domestic Tariff Area) clearance and granted relief to Samsung India Electronics. Coming to the facts of the present case, the appellant, M/s. Samsung India Electronics Pvt. Ltd has appealed against the order passed...
The Allahabad bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) held thatimported raw materials are eligible for basic customs duty exemption on DTA (Domestic Tariff Area) clearance and granted relief to Samsung India Electronics.
Coming to the facts of the present case, the appellant, M/s. Samsung India Electronics Pvt. Ltd has appealed against the order passed by the Principal Commissioner of the Excise Department, which confirmed a demand of Rs. 149.33 crores.
The appellant was registered with the Central Excise Department as an EHTP Unit for manufacturing excisable goods, including mobile phone handsets and tablet computers. They procured imported and indigenous capital goods, raw materials, and consumables at Nil duty under Notification No. 52/2003-Cus dated 31/03/2003, with receipt and consumption details reflected in their monthly ER-2 returns.
After investigation, it was found that the appellant had removed goods worth ₹6,640,687,425.58 without paying the required duty, making them liable for confiscation under Section 111(o) of the Customs Act, 1962. They also violated Notification No. 52/2003-Cus (31/03/2003) by removing imported raw materials during de-bonding without paying duties, making them subject to penalties under Sections 72 and 112 of the Customs Act.
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The department’s counsel submitted that the reason for denying the exemption is due to the reason that the DTA unit and the appellant are not eligible for the exemption due to non-fulfilment of the stipulated conditions for which the appellant has no valid explanation.
The bench going through various judgments noted that at the time of debonding, the value of raw material cleared has to be valued at the time of importation, and the rate of duty is the effective rate of duty leviable on the imported goods at the time of debonding.
The CESTAT relied on the case of Maneta Automotive Components P Ltd. [2015 (328) ELT 620 (T-Del)], in which the court held that ‘if some goods imported into India are fully and unconditionally exempt from Basic Customs Duty by some exemption notification while calculating the Central Excise Duty leviable on the DTA clearances of those goods, the Basic Customs Duty would have to be taken as nil, even if those DTA clearances are not in accordance with the conditions prescribed in para 6.8 of the Foreign Trade Policy.’
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The bench, comprising P.K. Choudhary (Judicial Member) and Sanjiv Srivastava (Technical Member), allowed the assessee’s appeal.
To Read the full text of the Order CLICK HERE
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