Tribunal upholds inclusion of SAD in excise duty for EOU

The Tribunal dismissed the appeal and upheld the department's demand for including the balance 50% of Special Additional Duty (SAD) in the calculation of excise duty on Domestic Tariff Area (DTA) clearances for a 100% Export-Oriented Undertaking (EOU). The decision was based on the absence of any exemption from paying SAD under the Finance Act, 1996, during the relevant period, as per the provisions of the Customs Act.

---

---

Issues:
Interpretation of Notification No. 2/95-C.E. regarding the calculation of duty of excise on Domestic Tariff Area (DTA) clearances for a 100% Export-Oriented Undertaking (EOU) involving Special Additional Duty (SAD) of customs leviable under the Finance Act, 1996.

Analysis:
The appellants, a 100% EOU, were permitted to clear 25% of their production to the Domestic Tariff Area (DTA) on payment of appropriate duty under Notification No. 2/95-C.E. The dispute arose when the department demanded a differential duty of excise for the DTA clearances, insisting on including the entire amount of Special Additional Duty (SAD) of customs leviable under the Finance Act, 1996, in the calculation. The appellants, however, claimed that only 50% of SAD should be included based on the notification's language. The department's demand was confirmed by lower authorities, leading to the present appeal.

Upon hearing both sides, the Tribunal analyzed the applicability of SAD of customs under the Finance Act, 1996, during the disputed period. It was noted that there was no exemption from paying this duty, and the provisions of the Customs Act were applicable to the levy and collection of special duties of customs, including SAD. The Tribunal highlighted that SAD of customs was one of the duties that could be treated as leviable under Section 12 of the Customs Act for the purpose of Notification No. 2/95-C.E. As there was no exemption from SAD during the relevant period, the Tribunal concluded that 50% of SAD leviable under the Finance Act, 1996, should be included in the calculation of duty of excise on DTA clearances.

In light of the above analysis, the Tribunal dismissed the appeal, upholding the department's demand for the balance 50% of SAD to be included in the duty of excise on the DTA clearance. The decision was based on the clear provisions of the Customs Act and the absence of any exemption from paying SAD during the disputed period.

The judgment was pronounced on 3-10-2005 by the Appellate Tribunal CESTAT, CHENNAI, with the order delivered by Member (J) P.G. Chacko.

---