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CX – Goods meant for export destroyed en route – goods having been destroyed before removal, no duty can be demanded and remission is permissible: CESTAT

2019-TIOL-2399-CESTAT-MAD

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI

Appeal Nos. E/40445 & 40446/2016

Arising out of Order-in-Appeal Nos. 20 & 21/2014-CE, Dated: 22.1.2014
Passed by the Commissioner of Customs and Central Excise (Appeals), Salem

Date of Hearing: 18.02.2019
Date of Decision: 18.02.2019

M/s INDIGRA EXPORTS PVT LTD

Vs

COMMISSIONER OF GST AND CENTRAL EXCISE
SALEM

Appellant Rep by: Ms S Sridevi, Adv.
Respondent Rep by: Shri S Govindarajan, AC AR

CORAM: Sulekha Beevi C S, Member (J)
Madhu Mohan Damodhar, Member (T)

CX – Granite slabs – Issue is Demand of duty for the goods that have been damaged en route and in transit while they were taken out for export.

Held: The Tribunal in the case of Tab India Granites (P) Ltd. had occasion to consider the very same issue and followed the decision of the Larger Bench of the Tribunal in the case of Honest Bio Vet Pvt. Ltd. – 2014-TIOL-2286-CESTAT-AHM-LB where it is held that when the goods are destroyed before export, the same having been destroyed before removal in terms of the above rules, no duty can be demanded and remission is permissible – following the same, the demand cannot sustain – impugned orders are set aside and the appeals are allowed : CESTAT [para 5, 6]

Appeals allowed

Case laws cited:

Hind Nippon Rural Indus (P) Ltd. Vs. Commissioner of Central Excise – 2004-TIOL-272-CESTAT-BANG… Para 2

Honest Bio Vet Pvt. Ltd – 2014-TIOL-2286-CESTAT-AHM-LB… Para 2

Tab India Granites (P) Ltd. Vs. Commissioner of Central Excise, Chennai 2017 (8) TMI 1161 – CESTAT Chennai … Para 3

SVG Exports (P) Ltd. Vs. Commissioner of Central Excise, Chennai – III – 2008 (232) ELT 305 (Tri. Chennai)… Para 3

FINAL ORDER NOS. 40334-40335/2019

Per: Bench:

Brief facts are that the appellant is an 100% EOU engaged in manufacture of granite slabs. They cleared quantity of 354 Nos. of granite slabs measuring 1230.840 square meter for export in 5 containers under ARE-1 dated 27.11.2007. Out of the 5 containers, the goods contained in 4 containers were duly exported under Shipping Bill dated 28.12.2007 except for a quantity of 48 granite slabs measuring 286.840 square meters. The said container which contained 48 granite slabs were returned to the factory in a fully damaged condition as the container met with an accident while in transit. The Central Excise duty paid involved in the above goods is Rs.3,22,360/-. Likewise, the appellant had cleared quantity of 120 Nos. of granite slabs measuring 459.85 square meters in 4 containers under ARE-1 dated 7.5.2010 for exports. The above goods were exported under Shipping Bill dated 7.5.2010 except for a quantity of 30 granites measuring 117.86 square meters. The said goods were returned to the factory in a fully damaged condition as the container carrying the goods met with an accident while in transit. The central excise duty involved in the returned goods is Rs.1,21,221/-. Two show cause notices dated 24.11.2010 and 17.2.2011 were issued proposing to demand central excise duty along with interest and for imposition of penalty. After due process of law, the original authority confirmed the excise duty of Rs.3,22,360/- and Rs.1,21,221/- respectively for the above goods which were not exported holding that there is no provision for remission of duty once the goods have been cleared from the factory. Aggrieved, the appellant filed appeals before Commissioner (Appeals) who vide orders impugned herein upheld the same. Hence these appeals.

2. On behalf of the appellant, ld. counsel Ms. S. Sridevi submitted that in the instant case, the appellant had cleared the goods under bond for export and only because the vehicle carrying the goods met with an accident the goods got damaged and were brought back into EOU. The goods were never cleared in DTA and therefore the appellants are not liable to pay duty. She submitted that the authorities below have relied upon the decision in Hind Nippon Rural Indus (P) Ltd. Vs. Commissioner of Central Excise – 2004 (167) ELT 414 (Tri. Bang.) = 2004-TIOL-272-CESTAT-BANG to confirm the duty. However, the Larger Bench of the Tribunal in the case of Honest Bio Vet Pvt. Ltd. reported in 2014 (310) ELT 526 (LB) = 2014-TIOL-2286-CESTAT-AHM-LB has dealt with the issue as to whether remission of duty is allowable when goods cleared from the factory without payment of duty for export under bond or destroyed due to unavoidable circumstances which, after taking into account various decisions including the aforesaid decision in Hind Nippon Rules Indus (supra) has held that remission of duty under Rule 21 of Central Excise Rules, 2002 is permissible and when the goods are destroyed before export the same having been destroyed before removal in terms of the above rules, no duty can be demanded. She relied upon the decision in the case of Tab India Granites (P) Ltd. Vs. Commissioner of Central Excise, Chennai reported in 2017 (8) TMI 1161 – CESTAT Chennai to argue that the very same issue has been considered by the Tribunal holding that the demand is not sustainable.

3. The ld. AR Shri S. Govindarajan supported the findings in the impugned order. He relied upon the decision in the case of SVG Exports (P) Ltd. Vs. Commissioner of Central Excise, Chennai – III – 2008 (232) ELT 305 (Tri. Chennai).

4. Heard both sides.

5. The issue is with regard to the demand of duty for the goods that have been damaged enroute and in transit while they were taken out for export. The Tribunal in the case of Tab India Granites (P) Ltd. (supra) had occasion to consider the very same issue and followed the decision of the Larger Bench of the Tribunal in the case of Honest Bio Vet Pvt. Ltd. (supra) and set aside the demand. The relevant portion is reproduced under:-

“5. It is not disputed that the goods cleared under bond for export were damaged in an accident. The appellant being an EOU is entitled for the benefit of Notification No. 24/2003 dated 31.03.2003, and that the goods have not been cleared in DTA. In the present case, the goods cleared for export got damaged in an accident and it cannot be said that the goods have been cleared in DTA. Further, the Larger Bench decision in the case of Honest Bio-Vet Pvt. Lt. (supra) has held that remission of duty is allowable when goods cleared from the factory without payment of duty for export under bond are destroyed in an unavoidable accident. In an identical case, the Tribunal in the case of Madhav Marbles and Granites Ltd. (supra), has held that the demand of duty is not sustainable since the EOU is eligible for the benefit of Notification No. 24/2003 dated 31.03.2003.”

6. Following the same, we are of the view that the demand cannot sustain. The impugned orders are set aside and the appeals are allowed with consequential relief, if any.

(Operative portion of the order was pronounced in open court)

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