Order Date - 13 June 2022

Facts:

• The Appellant, Lonsen Kiri Chemical Industries Limited, is 100% EOU, imported certain raw materials and warehoused the same. Since the raw material could not be used in the manufacture, they cleared after four years. At the time of clearance, the appellant had paid customs duty and also paid interest after the period of three years of bonding [as mentioned in section 61 (1)(aa)].
• The Commissioner of Central Excise & ST Department contended that since the appellant has not used the material imported, it cannot be said that the same was intended for use by 100% EOU, and according to section 61(1)(b) and in terms of sub-Section 2(ii), the appellant is required to pay interest after expiry of 90 days. 
• Learned commissioner also upheld the demand of interest, hence the appeal was filed by the appellants.

Issue:

• Whether interest payable on completion of 3 years of warehousing the goods intended for EOU can be extended to be paid after the completion of 90 days if the goods had been traded and not used for manufacturing of final products.

Order:

• The Tribunal observed that as per section 61(1)(aa), it is clear that any goods intended to use by 100% EOU and the same were cleared after warehousing period of three years and in terms of sub-section (2)(i) the assessee was required to clear the goods after expiry of three years.
• There is no dispute about the intention of the said goods to be used in the manufacture of final product in the 100% EOU unit of the appellant. Section 61(1) does not provide that goods should be used in the manufacture but it only requires that the goods imported with intention of use in 100% EOU. As regards the intention for use, it is not disputed. 
• Further, Tribunal also placed reliance on its earlier order passed in a similar matter in the case of Sun Pharmaceuticals Industries Limited.
• Hence, appellant’s clearances falls under the abovementioned category and the interest must be paid only after the completion of 3 years and the demand of interest over and above the interest paid by the appellant is not sustainable, and hence the appeal was allowed.