Exemption notification conditions must be fully satisfied when comparing duty on 100% EOU clearances with domestic goods

A 100% export oriented unit claiming partial exemption under Notification No. 101/93 had to satisfy the proviso requiring duty payable not to be less than the excise duty leviable on like goods manufactured outside the unit. For that comparison, the duty on comparable domestic goods had to be determined with reference to the tariff value fixed for such goods. The exemption could not be taken selectively by relying on the beneficial part of the notification while ignoring the limiting condition. On that basis, the duty demand was valid and the assessee could not avoid the tariff-value-based comparison.

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Issues: Whether the clearances made by a 100% Export Oriented Unit were entitled to duty benefit under Notification No. 101/93 without ensuring that the duty payable was not less than the excise duty leviable on like goods manufactured outside the unit, and whether the tariff value fixed under Notification No. 32/94 could be applied for that purpose.

Analysis: Section 3 of the Central Excises and Salt Act, 1944, as applicable to clearances by a 100% EOU, required the duty to be computed with reference to customs duties and, where the duty was chargeable by reference to value, valuation had to follow the Customs Act, 1962. Notification No. 101/93 granted partial exemption, but its proviso expressly required that the duty payable under the notification should not be less than the excise duty leviable on like goods produced outside the 100% EOU. To satisfy that condition, the excise duty on comparable domestic goods had to be determined with reference to the tariff value fixed for such goods. The exemption could not be claimed selectively by taking only the beneficial part of the notification and ignoring the limiting proviso.

Conclusion: The duty demand was valid and the assessee was not entitled to avoid the tariff-value-based comparison mandated by the proviso to Notification No. 101/93.

Final Conclusion: The appeal failed because the clearance by the 100% EOU had to comply with the full conditions of the exemption notification, including the minimum duty safeguard tied to the duty leviable on like domestic goods.

Ratio Decidendi: An assessee claiming exemption under a notification must satisfy every condition attached to it, including any proviso requiring duty to be no less than the duty leviable on like goods manufactured outside the exempt unit.

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