‘Appropriate rate of Duty’ used in Excise Notification is same for finished goods cleared on payment of duty at ‘Nil’ rate”: CESTAT sets aside Duty Demand

CESTAT quashed an excise duty demand of ₹4.5 crore, ruling that the appropriate rate of duty for finished goods cleared at nil rate must mirror the rate applicable to normal dutiable clearances. The tribunal rejected the department's attempt to apply a higher notional rate for goods cleared to SEZ units. This technical interpretation ensures parity in duty computation regardless of ultimate tax incidence. The case involved a pharmaceutical manufacturer following proper clearance procedures but challenged on rate application. The decision clarifies that notification benefits can't be indirectly neutralized through artificial rate enhancements. Industry experts welcome this as preventing double taxation and maintaining consistency in excise assessments, especially for units serving both domestic and SEZ markets.