Whether simultaneous procurement of duty free packing materials indigenously and other inputs via Advance License possible?

PJ/Case Law/2013-14/1849

Case:-SILVER SPARK APPAREL LTD. Versus COMMISSIONER OF C. EX., BANGALORE

Citation:- 2013 (290) E.L.T. 426 (Tri.- Bang.)

Brief Facts:- This application filed by the appellant seeks waiver and stay in respect of Central Excise duty demanded from them for the period from 9-5-2005 to 20-10-2008 and also in respect of equal amount of penalty imposed on them. The demand of duty which was on certain packing materials which were procured duty-free by the appellant in terms of Notification No. 43/2001-C.E. (N.T.), dated 26-6-2001 during the above period and used in relation to export of textile garments under advance licences, for which the necessary inputs like fabrics were imported duty-free under customs Notification No. 94/2004, dated 10-9-2004. The demand of excise duty which was foregone by the appellant at the time of procurement of packing materials under Notification No. 43/2001 ibid is on the ground that the appellant could not have availed the benefit of this notification simultaneously with that of the customs notification. In this connection, condition No. 8 of the customs notification was invoked, which reads as follows:
“that the export obligation is discharged within the period as specified in the said licence or authorization or within such extended period as may be granted by the Licensing Authority or Regional Authority by exporting resultant products manufactured in India and in respect of which facility under rule 18 or sub-rule (2) of rule 19 of the Central Excise Rules, 2002 has not been availed :
Provided that an Annual Advance Intermediate Licence holder shall discharge export obligation by supplying the resultant product to the ultimate exporter in terms of para 4.1.3 of the Foreign Trade Policy.”

Appellant’s Contention:-The Appellant has contended that the facility under sub-rule (2) of Rule 19 of the Central Excise Rules, 2002 read with Notification No. 43/2001-C.E. (N.T.) was available in respect of packing materials and not in respect of the resultant products exported and, therefore, any violation of condition No. 8 ibid cannot be attributed to the appellant. The learned Additional Commissioner (AR) has made an endeavor to interpret condition No. 8 in a manner which is in keeping with the allegations raised in the show cause notice and the findings recorded in the impugned order.

The appellant has also claimed the benefit of a Stay Order passed by this Bench vide Nuthatech Nutricare Technologies v. CCE - 2010 (262)E.L.T.734 (Tri.-Bang.)wherein waiver and stay were granted in respect of an amount of duty of excise which was demanded from the assessee on the ground that the benefit of the two notifications could not have been simultaneously availed by them.

Reasoning of Judgment:- The Tribunal heard both parties and finds that both sides have adverted to other factual aspects of the case also. However, for the present purpose, The Tribunal thinks that they can take a view without detailed discussion on such factual details. Prima facie, any violation of conditions of the customs notification would have resulted in a demand of customs duty on the imported materials. The Revenue has no case that the packing materials were procured indigenously by the appellant without following the procedure laid down under Notification No. 43/2001-C.E. (N.T.). This notification prima facie does not refer to any customs exemption notification. On these facts, prima facie, the appellant can claim waiver of pre-deposit and stay of recovery on the strength of the Stay Order cited by the counsel. It is ordered accordingly. In the result, there will be waiver and stay in respect of the duty and penalty amounts. Now that the stay application stands disposed of, the miscellaneous application filed by the appellant for out-of-turn disposal of the stay application is infructuous and hence dismissed.

Decision:- Stay application allowed.

Comment:- It is clear from this case is that the benefit of duty free procurement of packing materials indigenously under excise notification cannot be denied on the grounds that major inputs have been imported duty free under Advance License scheme. Moreover, there is no condition under excise notification that the simultaneous benefit under Advance License cannot be claimed.

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PJ/Case Law/2013-14/1849

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