The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has remanded a Rs. 3.90 crore excise demand against Sun Pharmaceutical Industries Ltd. regarding sales from an Export Oriented Unit (EOU) to a Domestic Tariff Area (DTA). The tribunal has directed the authorities to recalculate the deemed exports and the corresponding excise duty liability.
The dispute arose from the company’s sales from its EOU to its DTA unit, which were treated as deemed exports under the Export and Import Policy. The excise authorities demanded duty on these sales, claiming that they were not genuine exports. Sun Pharma argued that the sales were eligible for exemption under the exemption notification, as they were deemed exports.
The CESTAT observed that the excise authorities had not properly verified the deemed export benefits claimed by the company. The tribunal noted that the authorities had not considered the export proceeds realized by the company and had not verified the consumption of the goods in the DTA.
The CESTAT held that the excise authorities’ demand was not sustainable and remanded the matter to the original authority to recalculate the deemed exports and the corresponding excise duty liability. The tribunal directed the authorities to consider the export proceeds realized by the company and to verify the consumption of the goods in the DTA.
The CESTAT’s order is significant, as it clarifies the treatment of sales from an EOU to a DTA under the excise law. The order also highlights the importance of proper verification and calculation of deemed export benefits. The remand order will allow the authorities to re-examine the company’s claims and calculate the correct excise duty liability.
The case emphasizes the need for exporters to maintain accurate records and documentation to support their claims for deemed export benefits. It also underscores the importance of proper verification and calculation by the excise authorities to ensure that the correct excise duty liability is determined. The CESTAT’s order will provide guidance to other exporters and excise authorities in similar cases, ensuring consistency and clarity in the application of the excise law.