Rajasthan High Court - Jodhpur
Ercon Composites vs Union Of India on 10 January, 2022
Bench: Akil Kureshi, Rameshwar Vyas
(1 of 6) [CW-11298/2018]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
D.B. Civil Writ Petition No. 11298/2018
Ercon Composites, Khasra No. 1102/740/1 Marudhar Industial
Area, Phase 2nd Basni, Jodhpur (Raj) Through Its Partner Mukul
Maheshwai
----Petitioner
Versus
1. Union of India, Through The Secretary, Ministry of
Finance, Department of Revenue, Central Secretariat,
New Delhi.
2. The Dy. Commissioner, Central Excise And Service Tax, 4
Narpat Niwas, Air Force Road, Jodhpur.
3. The Commissioner, Central Excise, Jaipur Ii, New Central
Revenue Building, Statue Circle, C Scheme, Jaipur (Raj.)
4. The Addl. Secretary, Government Of India, Ministry Of
Finance, Department Of Revenue, 14- Hudco Vishala
Building, B Wing 6Th Floor, Bhikaji Cama Place, New
Delhi-110-066.
----Respondents
Connected With
D.B. Civil Writ Petition No. 11847/2018
Ercon Composites, Khasra No. 1102/740/1 Marudhar Industial
Area, Phase 2Nd, Basni, Jodhpur (Raj.) Through His Partner
Mukul Maheshwari.
----Petitioner
Versus
1. Union of India, Through The Secretary, Ministry Of
Finance, Department Of Revenue, Central Secretariat,
New Delhi.
2. The Dy. Commissioner, Central Excise And Service Tax, 4
Narpat Niwas, Air Force Road, Jodhpur.
3. The Commissioner, Central Excise, Jaipur Ii, New Central
Revenue Building, Statue Circle, C Scheme, Jaipur (Raj.).
4. The Addl. Secretaru., Government Of India, Ministry Of
Finance, Department Of Revenue, 14- Hudco Vishala
Building, B Wing, 6Th Floor, Bhikaji Cama Place, New
Delhi- 110-066.
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(2 of 6) [CW-11298/2018]
----Respondents
D.B. Civil Writ Petition No. 11859/2018
Ercon Composites, Khasra No. 1102/740/1 Marudhar Industial
Area, Phase 2Nd Basni, Jodhpur (Raj.) Through Its Partner Mukal
Maheshwari.
----Petitioner
Versus
1. Union of India, Through The Secretary, Ministry Of
Finance, Department Of Revenue, Central Secretariat,
New Delhi.
2. The Dy. Commissioner, Central Excise And Service Tax, 4
Narpat Niwas, Air Force Road, Jodhpur.
3. The Commissioner, Central Excise, Jaipur Ii, New Central
Revenue Building, Statue Circle, C Scheme, Jaipur (Raj.).
4. The Addl. Secretary, Government Of India, Ministry Of
Finance, Department Of Revenue, 14- Hudco Vishala
Building, B Wing, 6Th Floor, Bhikaji Cama Place, New
Delhi- 110-066.
----Respondents
For Petitioner(s) : Mr. Jitendra Maheshwari and Mr.
Saneev Johari, through V.C.
For Respondent(s) : Mr. Rajvendra Saraswat, through V.C.
HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI
HON'BLE MR. JUSTICE RAMESHWAR VYAS
Order 10/01/2022 The petitioner has challenged an order dated 17/18.04.2018 passed by the revisional authority reversing the appellate and adjudicating orders which were in favour of the petitioner.
Brief facts are noted from D.B. Civil Writ Petition No. 11298/2018. The petitioner had established a manufacturing unit which existed initially as a 100% Export Oriented Unit ('EOU' for short). Sometime later on, the petitioner converted itself from (Downloaded on 11/01/2022 at 09:10:55 PM) (3 of 6) [CW-11298/2018] EOU to a non-EOU unit. At the time of such conversion, the petitioner had paid the excise duty on the goods which were waived in the capacity of EOU. The petitioner thereafter exported the finished products from the domestic terrif area ('DTA' for short). Against these exports, the petitioner sought refund of the excise duty previously paid. The adjudicating authority as well as appellate authority accepted the request. The matter was carried in revision by the Government. The revisional authority reversed said orders by the impugned order. The main focus of the revisional authority was that the EOU unit and the DTA unit were not the same entity, for which purpose, the authority referred to the central excise registration numbers. Primarily on this ground, the benefit was denied.
Having heard the learned counsel for the parties and perused the documents on record, we find that the revisional authority has committed an error. The appellate authority had in its order discussed the issue of availability of refund of excise duty paid by the petitioner in the following manner:-
"6.1 In this regard, I observe that duty on the exported goods was paid at the time of the de- bonding of 100% EOU into a unit of domestic tariff area and as such at that time the unit was required to pay duty in terms of proviso to Section 3(1) of Central Excise Act, 1944 before applying for exit from the bonded status. Since the unit looses all the benefit available to 100% EOU after exit, the respondent therefore was legally required to pay duty on the finished goods as well as duty foregone on inputs and capital goods before de-bonding. It is also a fact that goods were not exported by the respondent in the status of EOU but were exported (Downloaded on 11/01/2022 at 09:10:55 PM) (4 of 6) [CW-11298/2018] as DTA unit. As such it is not correct to say that benefit of exemption under Notification No. 24/2003-CE dated 31.03.2003 was available to them. The other issue raised that goods should be exported after payment of duty as per condition No. (a) of Notification No. 19/2004-CE(NT) dated 06.09.2004. I find that department has recovered the duty payable on the finished goods lying at the time of de-bonding as per the provision of FTP to bring the unit at parity to DTA units as clarified by the Board under para 4 of the Circular No. 1/2004- Cus dated 05.01.2004. As such there is no confusion that goods exported were duty paid though the same was paid at the time of de- bonding to withdraw all the benefit of exemption provided to EOU. Thus, there was no scope to pay duty again on such finished goods transferred from EOU on payment of duty as the unit remains same and only status changed.
6.2 The department has also stated that the adjudicating authority has not determined the place of removal and that charges up to port has not been deducted from FOB value. Further, as per Para 3(iii) of the grounds of appeal, duty should have been paid on transaction value only. The respondent has submitted that in case of export, the place of removal is port of export where export documents are presented for clearances. This is clear from OIO No. 226-263/2011-R dt. 24.11.2011 passed by the same adjudicating authority which appears to have been accepted by the department. In this OIO, it was held that the place of removal in the case of export of goods is the place from where the goods leaves the territory of India this is the place from where the document called Export General Manifest, has been prepared and dispatched to the concern place of export that (Downloaded on 11/01/2022 at 09:10:55 PM) (5 of 6) [CW-11298/2018] may be port, airport, inland container depot, customs freight station or land customs station. Further, as per this OIO, the expenses incurred by the exporter from place of export to the place of removal are to be part of transaction value as has been provided in Section 4(3) of the Central Excise Act, 1944. In view of this, charges up to the port are not deductible and duty was correctly paid on FOB value which included all expenses from factory gate to the port of export. Reliance is also placed on decisions given by the Hon'ble Tribunal in the cases of Kuntal Granites Ltd. Vs. CCE 2007 (215) ELT 515 (Trib.) and Madhav Marbles & Granites Ltd. Vs. CCE 2009 (239) ELT 120 (Trib.). In this regard I find that the adjudicating authority has rightly decided that the place of removal in the case of export of goods is port of export as held by the Hon'ble CESTAT in the case of M/s Madhav Marbles & Granites Ltd. Vs. CCE reported in 2009 (239) ELT 120 (Trib.) and in number of other cases decided by the Tribunals. I thus do not find any infirmity in the finding of the adjudicating authority in holding that FOB value is the correct transaction value for granting rebate claim."
The revisional authority reversed this decision primarily on the ground that the EOU and DTA units were not same entities. As noted, in the process, the revisional authority observed that the petitioner is a different entity from the 100% EOU which can be seen from the central excise registration numbers. Counsel for the petitioner correctly pointed out that the registration numbers were identical for both the units.
Shorn of legal technicalities what emerges is that the petitioner as a 100% EOU would have made purchases of raw material and inputs from the local market without payment of (Downloaded on 11/01/2022 at 09:10:55 PM) (6 of 6) [CW-11298/2018] excise duty as well as not born duty on final product manufactured by it on a promise that the final product would be eventually exported. When it showed the desire to convert itself from 100% EOU to DTA, as per requirement of law, it had to pay up the excise duty on such purchases and final product where duty was previously not collected. Admittedly, such duty was paid at the time of what is refered to de-bonding. However, this would not prevent the exporter from claiming refund of excise duty if the goods are eventually exported. The petitioner as a DTA unit exported the goods and claimed refund of excise duty previously paid in its capacity as an EOU. We do not find that there is any procedure in law to deprive the petitioner from such benefit. The appellate authority has correctly discussed the legal position. The revisional authority has committed error in reversing the said order.
In the result, all the petitions are allowed and the respective impugned orders are set aside.
(RAMESHWAR VYAS),J (AKIL KURESHI),CJ
38-40 - Inder/-
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