AMIT PAITHANKAR vs CC (NHAVA SHEVA-GENERAL) MUMBAI

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
MUMBAI

REGIONAL BENCH - COURT NO. 2

Customs Appeal No. 85270 of 2016

[Arising out of Order-in-Original No. 12/2015-16/RT-04/NS-GEN dated 06.11.2015 passed
by the Principal Commissioner of Customs, (NS-General), JNCH, Nhava Sheva.]

Amit Paithankar … Appellant
Managing Director
M/s Emerson Process Management (India) Private Limited
Delphi, B-Wing, 6th Floor
Central Avenue, Hiranandani Business Park
Powai, Mumbai – 400 076.
Versus

Principal Commissioner of Customs (General) …. Respondent
Jawaharlal Nehru Custom House (JNCH)
Nhava Sheva, Taluka Uran
District Raigad, Maharashtra – 400 707.

WITH

Customs Appeal No. 85271 of 2016

[Arising out of Order-in-Original No. 12/2015-16/RT-04/NS-GEN dated 06.11.2015 passed
by the Principal Commissioner of Customs, (NS-General), JNCH, Nhava Sheva.]

Emerson Process Management (India) Pvt. Ltd. .… Appellant
Delphi, B-Wing, 6th Floor
Central Avenue, Hiranandani Business Park
Powai, Mumbai – 400 076.
Versus

Principal Commissioner of Customs (General) …. Respondent
Jawaharlal Nehru Custom House (JNCH)
Nhava Sheva, Taluka Uran
District Raigad, Maharashtra – 400 707.

APPEARANCE:

Shri Akhilesh Kangasia along with Ms. Madhura Khandekar, Advocates for the for the
Appellants

Shri Krishna Azad, Authorized Representative for the Respondent


AND

Customs Appeal No. 85291 of 2016

[Arising out of Order-in-Original No. 12/2015-16/RT-04/NS-GEN dated 06.11.2015 passed
by the Principal Commissioner of Customs, (NS-General), JNCH, Nhava Sheva.]


Principal Commissioner of Customs (General) …. Appellant
Jawaharlal Nehru Custom House (JNCH)
Nhava Sheva, Taluka Uran
District Raigad, Maharashtra – 400 707.

Versus

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Emerson Process Management (India) Pvt. Ltd. .… Respondent
Delphi, B-Wing, 6th Floor
Central Avenue, Hiranandani Business Park
Powai, Mumbai – 400 076.

APPEARANCE:

Shri Krishna Azad, Authorized Representative for the for the Appellant

Shri Akhilesh Kangsia along with Ms. Madhura Khandekar, Advocates for the Respondent


CORAM:

HON’BLE MR. AJAY SHARMA, MEMBER (JUDICIAL)
HON’BLE MR. M.M. PARTHIBAN, MEMBER (TECHNICAL)

FINAL ORDER NO. A/86077-86079/2026

Date of Hearing: 10.08.2026
Date of Decision: 02.09.2026

Per: M.M. PARTHIBAN

These appeals bearing No. C/85270/2016 and C/85271/2016 have
been filed by M/s Emerson Process Management (India) Private Limited,
Mumbai, the appellant company and Shri Amit Paithankar, Managing Director
of the appellant company (herein after, referred together as ‘the appellants’,
for short) assailing the Order-in-Original No. 12/2015-16/RT-04/NS-GEN
dated 06.11.2015 (herein after referred to as ‘the impugned order’) passed
by the Principal Commissioner of Customs, (NS-General), JNCH, Nhava Sheva.
Revenue has also filed an appeal bearing No. C/85291/2016 assailing the
impugned order, in pursuance of Review Order No.02/2015-16 dated
04.02.2016 of the Committee of Chief Commissioner of Customs on the
grounds that in the impugned order, the learned Commissioner of Customs
has failed to impose penalty equal to the amount of duty confirmed therein
under Section 114A of the Customs Act, 1962.

2.1 The facts of the case, leading to these appeals, are summarized herein
below:

2.2 The appellant company herein inter alia , is engaged in manufacture of
process management equipment, including transmitters, liquid analyser
systems, gas analyser systems and process control systems etc., and for that
purpose had imported various raw materials and used the same for
manufacture of final products in their factory situated at Plot No. A-145/4, TTC
Industrial Area, MIDC, Pawne, Navi Mumbai. These imported goods were

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supplied through M/s Siddarth Logistics Company Private Limited, a unit
situated within M/s Arshiya International Limited Free Trade Warehousing
Zone (FTWZ). Whenever the imported goods are sold in the Domestic Tariff
Area (DTA) and such sale not being exempt from payment of sales
tax/VAT, exemption from payment of the whole Special Additional Duty of
Customs (SAD) leviable under sub-section (5) of Section 3 of the Customs
Tariff Act, 1975 in terms of Notification No. 45/2005-Customs dated
16.05.2005 as amended, was available to the importers. Upon receipt of the
imported goods at the appellants factory, the said goods undergo further
processing for manufacture of process control systems and thereafter such
final products are sold to dealers/customers in DTA upon payment of
applicable VAT/sales tax. On the above basis, the appellants had submitted
an undertaking with the Specified Officer of FTWZ declaring that appropriate
VAT/CST shall be paid upon sale of final products manufactured by them in
the DTA, and on such basis availed the SAD exemption benefit available under
the said Notification dated 16.05.2005.

2.3 On the basis of intelligence developed by the Directorate General of
Central Excise Intelligence, Mumbai Zonal Unit (DGCEI) that the appellant
company is availing exemption benefit of SAD on imported goods which are
used in their factory, detailed investigations were conducted. Upon completion
of such investigation, Show Cause Notice (SCN) dated 28.05.2015 was issued
by the department, proposing for demand of SAD of Rs. 1,79,95,057/- along
with interest under Section 28(4) of the Customs Act, 1962 by invoking the
extended period along with proposal for confiscation of the impugned goods
under Section 111(o) ibid ; imposition of penalty on the appellants under
Sections 112, 114A and 114AA ibid . In adjudication of the aforesaid SCN dated
28.05.2015, learned Principal Commissioner of Customs has confirmed all the
proposals made in the SCN. Feeling aggrieved with confirmation of the
adjudged demands, the appellants have filed these appeals before the
Tribunal. Revenue has also filed an appeal against the impugned order for
non-imposition of mandatory penalty of penalty equal to duty under Section
114A ibid.

3.1 Learned Counsel appearing for the appellants submitted at the outset
that the issue of eligibility to SAD exemption benefit on clearance from FTWZ
to DTA, on stock transfer basis, is no longer in dispute as has been conclusively
settled in favour of the appellants in a number of decisions held by the
Tribunal, both on merits and on account of time bar. Further, he stated that

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the appellants have correctly availed the exemption benefit under Notification
No. 45/2005-Customs dated 16.05.2005 inasmuch as mere stock transfer of
goods from FTWZ to DTA cannot be equated with an exemption from sales
tax/VAT. Further, he submitted that applicable VAT/CST have been paid on
the final products when these are cleared from their factory, duly supported
by invoices produced by them along with certificate issued by the Chartered
Accountant.

3.2 Furthermore, learned Counsel also stated that the appellants have made
a complete disclosure of facts to the Department, and hence there is no
ground of any suppression of facts by the appellants, particularly so when the
entire clearances of goods have been undertaken by duly following the
procedure prescribed by the Department and upon supervision by the officers
of the Department. Further, the appellants had reasonable belief that they are
eligible for exemption as the Development Commissioner of SEZ/FTWZ had
approved of the same and the FTWZ unit M/s Arshiya International Limited,
had assured them of such exemption benefit being available to them. Further,
it was an industry wide issue and there were different interpretation adopted
by different wings of government. Thus the entire demand raised in the SCN
dated 28.05.2015, demanding duty for the disputed period 07.04.2012 to
31.07.2013 is barred by limitation of time; and consequently, confiscation of
impugned goods and imposition of final penalty are also liable to be set-aside.

3.3 In support of their stand, learned Advocate had cited the following
decisions of the judicial forums"
( i ) CRI Limited v. Commissioner of Customs - Final Order No.
75617/2020, dated 18.11.2020 upheld by Hon'ble Supreme Court [2024
(387) E.L.T. 514 (S.C.) = (2023) 13 Centax 235 (S.C.)]

( ii ) Commissioner of Central Excise v. Serum Institute of India - 2019
(370) E.L.T. 407 (Tri.-Mum.)

( iii ) Lloyd Electric & Engineering v. Commissioner of Central Excise & S.
Tax - 2018 (361) E.L.T. 1043 (Tri.-All)

( iv ) Peekay Re-Rolling Mills v. Asst. Commissioner - (2007) 4 SCC 30
- 2007 (219) E.L.T. 3 (S.C.) = 2009 (13) S.T.R. 305 (S.C.)

( v ) Dixon Technologies India Private Limited v. Commissioner, Customs
& Central Excise, Noida-II - Final Order Nos. 70952-70953/2024, dated
11.12.2024.


4. Learned Authorized Representative appearing for the Revenue
reiterated the findings recorded in the impugned order and further submitted
that since the matter was clarified by the Tax Research Unit, Ministry of

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Finance in Customs Circular No. 44/2013 dated 30.12.2013 stating that the
benefit of SAD exemption would not be available on goods cleared from
SEZ/FTWZ unit to DTA unit on stock transfer basis for self-consumption, the
confirmation of adjudged demand of duty in the impugned order cannot be
interfered with. He further stated that since the legal provision of Section 114A
ibid provided for mandatory penalty equal to the duty amount, the action on
the part of the learned Principal Commissioner in imposing reduced amount of
penalty needs to be revised for imposition of higher penalty as equal to the
amount of duty confirmed in the impugned order. Thus, he submitted that the
appeal preferred by Revenue may be allowed and the appeals filed by the
appellants may not be entertained.

5. Heard both sides and perused the case records.

6. The issue for consideration before us is, whether the benefit of
Notification No. 45/2005 Customs dated 16.05.2005 as amended, providing
exemption from payment of the whole of SAD in respect of goods cleared
from the SEZ/FTWZ unit to the DTA unit of appellants, by way of stock transfer
is available or not.

7. We find that the issue involved in this case had been examined by
various Co-ordinate Benches of the Tribunal in similar set of facts, and have
held therein for extending exemption benefit in favour of the appellants in few
cases and have also set aside the orders of the lower authority on time bar
aspect also.

8. In the impugned order, the findings recorded by the learned Principal
Commissioner is that the appellants are the true and rightful importer of the
goods, till it reaches their factory at Pawne, Navi Mumbai. Though the
imported goods are cleared through FTWZ unit, since this does not amount to
sale and no Sales Tax/VAT is applicable on such clearances, in terms of
Notification No.45/2005-Custms dated 16.05.2005, the appellants are liable
to pay SAD and they cannot avail the benefit of SAD exemption which has
been barred in respect of goods which are exempt from payment of sales
tax/VAT.

9.1 In the case of CRI Ltd. ( supra ), the Co-ordinate Bench of the Tribunal had
examined the disputed issues which are identical to the present case before
us, and both on merits and on time bar aspect, they have decided the case in

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favour of the appellants therein. The observations made by the Tribunal are
extracted and given as under:-
"6. The crux of the issue involved in this case is whether the benefit of
Notification No. 45/2005 as amended granting exemption from "SAD" is
available in respect of "Blanks" cleared from the "SEZ Unit" of the Appellant by
way of stock transfers to its DTA Unit". The scope of the said Notification is
reproduced below.

"In exercise of the powers conferred by sub-section (1) of section 25 of the
Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is
necessary in the public interest so to do, hereby exempts all goods cleared from a
special economic zone and brought to any other place in India in accordance with
the provisions of the Foreign Trade Policy 2004-2009, from the whole of the
additional duty of customs leviable thereon under sub section (5) of section 3 of
the Customs Tariff Act, 1975 (51 of 1975). Provided that no such exemption shall
be applicable if such goods, when sold in domestic tariff area, are exempted by the
State Government from payment of sales tax or value added tax."

The Notification exempts all goods "cleared from a SEZ" and "brought to any
other place in India". The nature of clearance, whether by way of sale or
otherwise, is not qualified in any manner in the body of the Notification. The
proviso which embodies the condition/test governing the exemption gets
attracted only if the goods which are the subject matter of clearance, when sold
in the DTA, are exempted from the payment of Sales Tax/VAT. In the instant
case, it is undisputed that the clearance of blanks to the "DTA" is not by way of
sale and that the underlying goods are not exempted by the State Government
from the levy of VAT. The adjudicating Authority has himself accepted that such
blanks attract VAT @ 5% as Ball Pen parts and the same is also evident from a
sample Tax Invoice dated 20 April 2014 enclosed as part of the Appeal Paper
Book. Therefore, the proviso is not attracted at all. There is no exemption from
VAT/Sales Tax but just a deferral of the VAT/Sales Tax liability until the sale
takes place. We also find that the issue involved herein is squarely covered by
the decision of the division bench of the Tribunal in the case of Serum Institute
of India (supra) [refer para 5 & 6]. The decision of the AAR in the case of GE
India (supra) also supports the case of the Appellant. We are in complete
agreement with the contention of the Appellant that the Circular cannot curtail
the scope of an exemption notification which deserves to be interpreted strictly
and on its own terms as held by the Hon'ble Supreme Court in the Tata Tele
Services case (supra).
xxx xxx xxx xxx

8. In the present case, the impugned order itself records at para 12.11 that the
subject goods as "ball pen parts" were generally exempted from central excise
duty under S. No. 325(ii) of Notification No.12/2012 dated 17 March 2012. Even
on the point of limitation the demand has to fail as the BOE's were countersigned
by the customs official prior to clearance of goods from the Falta,
SEZ. Therefore, the department was aware that the goods were cleared by way
of stock transfers not attracting any VAT/Sales Tax. The Notice was issued only
after the expiry of the normal period of limitation of 1 year and could not revive
the demand, which had got time barred. The decision of the Tribunal in
Baccarose Perfumes and Aveco Technologies case fully supports the case of the
Appellant.

9. Coming to the issue of limitation, we find that the bills of entry were filed and
assessed by customs officers in charge of the SEZ; the issue involves

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interpretation of a notification; therefore, we find that no suppression and wilful
misstatement etc with intent to evade payment of duty can be alleged and
extended period cannot be invoked. Coming to the normal period, learned
counsel for the appellants submits that although the normal period of limitation
was enhanced from 1 year to 2 years with effect from 14 May 2016 the Notice
in the instant case, SCN as issued only thereafter on 3 October 2016 covering a
period April 2014 to December 2014; the amendment was not a retrospective
one; demands which had already become barred by limitation could not get
revived by the amendment. We find that Section 28 of the Customs Act, 1962,
which provides for recovery of duties not levied or not paid or short paid or
erroneously refunded, was amended by Finance Act, 2016 (28 of 2016) w.e.f.
14-5-2016. It provides for demanding duty within 2 years in cases not involving
collusion, misstatement etc. we find that the counsel is attempting to equate the
issuance of SCN with commission of any offence. In the instance case, the
imports being undertaken for the period April-December 2014, normal period,
as per the provision of law existing on that day, ends in October, 2015.
Therefore, the issue is beyond normal period by the time the amendment came
in to force. Therefore, we find that the department cannot issue Show cause
notices for the normal period, of two years also, in the instant case."

9.2 In another case of Linc Pen & Plastics Ltd. ( supra ), the Co-ordinate
Bench of the Tribunal had held that the benefit SAD exemption is available for
clearances from SEZ to the DTA unit.
"10. As an identical issue has already been dealt with by this Tribunal in the case
of CRI Ltd. (supra), therefore, following the judicial precedent, we hold that the
appellant is entitled to the benefit of Notification No. 45/2005-Cus (Tariff) dated
16.05.2005, as amended, which grants exemption from payment of SAD in
respect of Plastic ball pen parts cleared by them from their SEZ unit to the
DTA unit."

10.1 It is an undisputed fact on record that the facts of the present case are
identical to the case decided by this Tribunal in the case of CRI
Limited ( supra ). The department having been aggrieved by such orders of the
Tribunal had preferred appeal before the Hon'ble Supreme Court in Special
Leave Appeal (C) Nos. 16739-16794 of 2023. In the said SLP filed by the
department, the Hon'ble Supreme Court vide its judgement dated 12.12.2023,
had dismissed the SLPs and allowed the department to avail of appellate
remedy, if so advised.

10.2 On careful perusal of the impugned order of the learned Commissioner,
it is seen that it was recorded therein that the appellants in spite of being well
aware that the goods imported by them would be consumed by them and no
ST/VAT/CST was required to be paid by them, they still gave misleading
undertaking along with certificate from Chartered Accountant to the effect that
the imported goods which are used in the goods manufactured by them and
cleared under subject Bills of Entry are not exempted from ST/VAT/CST, which
clearly shows that they had malafide intention and had clearly mis-declared

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as well as suppressed the facts. The question of leviability to duty (SAD) or
exemption thereof is a question of fact and calls for no undertaking to be
furnished. Therefore, he upheld the duty demands invoking the extended
period of time.

11. However, on close examination of the issue which was prevalent with all
such FTWZ unit clearances and the peculiar facts of the case and documents
placed below, we find that on the very same disputed issue involved in similar
cases, there were correspondences exchanged between the Ministry of
Commerce & Industry, SEZ section and the Ministry of Finance. In one of such
communication dealt with in a similar case, vide Order dated 11.10.2013, the
Development Commissioner, SEEPZ SEZ vide his Order No. SEEPZ
SEZ/51/MISC/74/Cus/1013-14 had specifically ordered that benefit of
Notification No. 45/2005-Customs dated 16.05.2005 should not be denied and
such instructions should be followed strictly and any unjustified deviation
would seriously viewed and disciplinary action would be taken against erring
officials who do not implement the same. Further, the issue of exemption from
levy of SAD under Notification No. 45/2005 dated 16.03.2005 was taken up
in one such similar case in the meeting of the Unit Approval Committee held
on 16.05.2012 at Noida Special Economic Zone and as recorded in the Minutes
of that meeting, it was decided to furnish a certificate from the chartered
accountant for compliance with the condition that Sales Tax/VAT is paid
against the goods cleared and sold, within three months after clearances of
the goods for availing SAD exemption benefit under Notification No. 45/2005-
Customs dated 16.03.2005. It was also decided that similar practice should
be adopted by the customs officer/specified officer posted at all FTWZ. Thus,
we are of the view that the practice adopted by the appellants, neither had
any malafide intention, nor was there any suppression of fact, in order to
avail SAD exemption benefit. Therefore, in our opinion there exist no ground
for invoking extended period of limitation with suppression of facts for issuing
the SCN dated 28.05.2015 in order to cover the period duty demands arising
during April, 2012 to July, 2013, inasmuch as the same is beyond the normal
period of one year. Since, the demand of duty arising on the disputed issue
does not sustain on account of the fact that the entire demand of duty fall
under extended period of limitation, we do not find any reason for going into
the merits of the case.

12. In view of the above discussions and the settled position of law as held
in the case of CRI Ltd . ( supra ), we are of the considered view that the issue

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under dispute is no more res integra , and this Bench of the Tribunal cannot
take a different decision than the one already decided in favour of the
appellants. Accordingly, the impugned order confirming adjudged demands on
the appellant company, along with confiscation of goods and imposition of
penalty on the appellants by invoking extended period of limitation is set aside
and the appeals are allowed in favour of the appellants. Appeal filed by
Revenue for imposition of mandatory penalty under Section 114A ibid
therefore is also not sustainable and thus such appeal is liable to be dismissed.

13. In the result, the impugned order is set aside and the appeals are
allowed in favour of the appellants. Appeal filed by Revenue is dismissed.


(Order pronounced in the open court on 02.09.2026)





(Ajay Sharma)
Member (Judicial)



(M.M. Parthiban)
Member (Technical)
Sinha