EOU clearances and double demand: customs duty cannot be levied again where excise duty was already demanded for the same goods.

Where a 100% Export Oriented Unit clears imported inputs into the Domestic Tariff Area, the relevant exemption notification treats the goods as liable to duty of excise under Section 3 of the Central Excise Act if they are sold in India; customs duty on the imported inputs arises only if the articles are not excisable. Because central excise duty had already been demanded for the same products and period, a second customs duty demand on the same clearances was impermissible. The notice relating to goods seized from a truck was not covered by the earlier proceedings, so separate action in accordance with law remained open for those goods.

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Issues: Whether customs duty could again be demanded under the Customs Act for the same products and same period for which central excise duty had already been demanded in respect of clearances made by a 100 per cent Export Oriented Unit in the Domestic Tariff Area, and whether the impugned order could survive in respect of goods seized from the truck.

Analysis: The goods were imported by a 100 per cent Export Oriented Unit under the benefit of the relevant customs exemption notification and were used in the manufacture of galvanised pipes. Paragraph 7 of the notification contemplated that goods used for manufacture in the unit, if sold in India, would attract duty of excise leviable under Section 3 of the Central Excise Act, and only where the articles were not excisable would customs duty on the imported inputs become payable. Since duty had already been demanded under the central excise law for the same products and period, it was not open to the Department to raise a second demand of customs duty on the same goods. The goods seized from the truck, however, were stated not to be covered by the earlier show cause notices.

Conclusion: The customs duty demand was unsustainable and the impugned order was set aside, while the Revenue was left free to take action in accordance with law in respect of the truck-seized goods.

Final Conclusion: The appeal succeeded on the principal customs duty demand, but the Revenue's right to proceed separately against the seized goods remained unaffected.

Ratio Decidendi: Where the same goods and same period are already subjected to central excise duty under the notification governing EOU clearances, customs duty cannot be demanded again on the same clearances; customs duty under the notification arises only when the goods are not excisable.

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