2026-VIL-1553-CESTAT-MUM-CU
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CUSTOMS CESTAT Cases

Customs - Special Additional Duty exemption under Notification No. 45/2005-Customs dated 16.05.2005 for goods cleared from SEZ/FTWZ unit to DTA unit on stock transfer basis - Appellant company imported raw materials through a Free Trade Warehousing Zone unit for manufacture of process management equipment and cleared the goods to its DTA on stock transfer basis claiming exemption from SAD - Demand of Special Additional Duty along with interest and penalties invoking the extended period of limitation on the ground that Appellant had suppressed facts and availed benefit without entitlement - Whether the benefit of Notification No. 45/2005-Customs providing exemption from Special Additional Duty is available for goods cleared from SEZ or FTWZ unit to DTA unit on stock transfer basis when VAT is subsequently paid upon sale of final products - Extended period of limitation on ground of suppression of facts - HELD - The Notification exempts all goods cleared from a SEZ and brought to any other place in India and the nature of clearance whether by way of sale or stock transfer is not qualified or restricted in the notification. The proviso gets attracted only if the goods when sold in the Domestic Tariff Area are exempted from payment of sales tax or VAT - In the present case, the clearance is not by way of sale and the goods attract VAT when sold indicating there is no exemption from such tax but merely deferral until sale takes place. The practice adopted by Appellant in furnishing undertaking and CA certificate for compliance with statutory condition is consistent with instructions issued by Development Commissioner – Further, the B/E were assessed and countersigned by Customs officers and therefore the department was well aware that goods were cleared on stock transfer basis not attracting sales tax or VAT. No suppression or wilful misstatement with intent to evade payment of duty can be alleged when facts were known to and recorded by customs authorities - The question of leviability to duty or exemption thereof is a matter of interpretation of statute and does not require undertaking and no malafide intention can be inferred merely from furnishing certificate from Chartered Accountant - The impugned order confirming adjudged demands of SED along with confiscation of goods and imposition of penalty invoking extended period of limitation is set aside. The appeals filed by Appellant are allowed and demand of Special Additional Duty is set aside. The appeal filed by Revenue for imposition of mandatory penalty under Section 114A is dismissed
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