Exemption on import of export goods for use in fair by 100% EOU

PJ/Case Laws/2011-12/1388

Exemption on import of export goods for use in fair by 100% EOU - availability of

Case: COMMISSIONER OF CUSTOMS, JODHPUR v/s SETHIA HANDICRAFTS (P) LTD.

Citation: 2011 (271) E.L.T. 425 (Tri.-Del.)

Issue:- Whether benefit of exemption from Customs duty can be forbidden on ground that there is no Notification issued under Section 25 of the Customs Act, 1962 which exempts re-import from custom duties?

Brief Facts:- Respondent-100% EOU unit had exported goods for display at Fair Singapore 2006 on returnable basis. They imported these goods through ICD Concor, Jodhpur and filed bill of entry No. 006/2007-07 dated 21-4-06 claiming clearance without payment of duty in terms of Para 2.29 of Handbook of Procedure of Foreign Trade Policy 2004-09.

The benefit of exemption from customs duty was not extended to them on the grounds that there is no Notification issued under Section 25 of the Customs Act, 1962 which exempts such re-import from customs duties as claimed by the respondents being an 100% EOU. Accordingly the Assistant Commissioner confirmed the duty of Rs. 1,80,548/- in respect of the said re-imported goods.

In appeal, the Commisioner (Appeal) found that the goods were imported after participating in International Fair and there is no dispute regarding the identity of the goods. The dispute is regarding provision of law under which import can be allowed. It was found that the goods imported by an EOU is exempt from customs duties vide Notification No. 52/2003-Cus, dated 31.03.2003. It was further held that there was force in the submission of the assessee that the imported goods will be finished and re-packed which according to Para 9.37 of Chapter 9 of the policy is a manufacturimg process. Therefore, the imported goods are going to be used for the purpose mentioned in the exemption Notification. The Order-in-original was set aside.

Revenue is in appeal against the order of the Commissioner (Appeal).

Respondent’s Contention:- Respondent have placed reliance upon the Board’s Circular No. 314/30/97-CX., dated 6-5-97 which is as under:

As per the proviso to rule 9(1) any clearance of 'excisable goods' from the place of their production (including a 100% EOU), without payment of duty for export shall be under rule 13 and as per Explanation 1 to rule 13, 'manufacture' includes the process of blending of any goods or making alteration or any other operation thereon, since the clearances for export under bond by the 100% EOU is under rule 13, the said Explanation will be applicable to the present case. Thus the term 'manufacture' for the purposes rejected of export is wider in meaning than that used in section 2(f) of the Central Excise Act, 1944 and 'galvanizing will amount to 'manufacture' in terms of the Explanation above.

Hence, it is clarified that a broader view is called for in respect of the interpretation of the provisions of notification No. 1/95-C.E. and the exemption may not be restricted only to cases where 'manufacture' under section 2(f) of Central Excise Act is involved. It is clarified that the exemption under notification No. 1/95-C.E. will also be applicable to a 100% EOU engaged in `galvanizing' of black MS pipes. This issues with the approval of the Board."

Reasoning of Judgment:- The Tribunal held that there was no infirmity in the view taken by the Commissioner (Appeal). Reference was made to the Board’s Circular No. 314/30/97-CX which was relied upon by the respondent.

It was held that the said circular was noted by the Tribunal in the case of Winsome Yarns Ltd. v. CCE, Chandigarh [2004 (172) E.L.T. 286 (Tribunal)] wherein on the facts of the said case it was found that as per Board’s Circular dated 06.05.97 the Board itself has clarified that the term ‘manufacture’ for the purpose of export is wider in meaning that that used in Section 2 (f) of the Central Excise Act and galvanizing will amount to manufacture in terms of the explanation. Reliance was also placed on the observations made in the case of S.T.L Exports Ltd v/s CCE, Indore [2003 (162) ELT 546 (Tri-Del)].

It was held that as per para 9.37 of Chapter 9 of the policy support the respondent’s case. Further as informed by the respondent the said goods were subsequently exported by them. Hence, no justifiable reasons to interfere in the order of the lower Authorities.

Decision:- Appeal rejected.

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PJ/Case Laws/2011-12/1388

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