The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Ahmedabad set aside the demand for excise duty due to the failure of revenue in establishing the clandestine clearance.
Shri Paresh Sheth & Amal Dave represented the Appellant and Shri Vinod Lukose represented the Respondent
The appellant engaged in the manufacture of Brass Rods. The scrutiny of the documents revealed that the appellant cleared Brass and Copper Alloys Rods to 100% EOUs and SEZ and availed the benefit of Deemed Exports and subsequently claimed Advance Authorization from the DGFT, for duty-free import of raw materials.
It was contended that the appellant showed the fictitious clearance of 248204 Kgs. of Brass Rods/ Brass Hollow Rods/ Copper Alloys Ingots on records i.e. ARE-3 and invoices, where cleared the same into the open market clandestinely and wrongfully availed Refund of Rs. 90,59,957/ – as TED from DGFT.
The appellant contended that the DRI investigation revealed that the Appellant had clandestinely disposed of the goods in the open market instead of supplying the goods to EOUs and had fraudulently showed clearance of brass/copper alloys rods to EOUs and availed the benefit of deemed export in the form of advance authorization.
It was observed that once in the 100% EOU the raw material imported duty-free and used in the manufacture of the final product and the final product is cleared on payment of duty in DTA, the customs duty on the raw material cannot be demanded.
Judicial member Mr Ramesh Nair and Technical Member Mr Raju observed that the demand of Customs duty and Central Excise duty along with interest and imposition of penalties related to the raw materials were not sustainable and set aside the impugned order and allow the appeals of the assessee. The appeal of the Revenue got dismissed.
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