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of <h1>EOU Denied Export of Vegetable Oil, Allowed Deoiled Cake Instead</h1> The Respondents were denied permission to export vegetable oil as a 100% Export Oriented Unit (EOU) but were allowed to export deoiled cake instead. The ... EXIM - Vegetable oil manufactured by EOU, 100% EOU Issues involved: Refusal of 100% EOU permission for export of vegetable oil, demand of duty on DTA sale of vegetable oil treated as bye-product of EOU, interpretation of Notification No. 8/97 regarding levy of excise duty on goods produced in 100% EOU.Refusal of 100% EOU permission for export of vegetable oil:The Respondents initially sought permission for exporting vegetable oil extracted from oil seeds as a 100% EOU, which was denied. Subsequently, they requested permission to export deoiled cake, a by-product in the oil extraction process, which was granted. The Respondents did not receive any duty concessions on raw materials or machinery used. The vegetable oil they produced was chargeable at a Nil rate of duty under the Excise Act. The Lower appellate authority held that the vegetable oil was not covered under the EOU Scheme and thus subject to Nil Tariff Rate applicable to any other DTA Unit.Demand of duty on DTA sale of vegetable oil treated as bye-product of EOU:The department demanded duty on the DTA sale of vegetable oil, considering it a bye-product of an EOU and thus chargeable to Excise Duty. Notification No. 8/97, as amended, mandates the levy of actual excise duty on goods produced in a 100% EOU if made entirely from indigenous raw material. The Department did not apply the benefits of this Notification due to a proviso. The Lower appellate authority set aside the demand, stating that the vegetable oil was not covered under the EOU Scheme and should be treated at par with any other DTA Unit.Interpretation of Notification No. 8/97 regarding levy of excise duty:After considering arguments and case records, it was noted that the Respondents were only allowed to export deoiled cake, not vegetable oil. Since no duty benefits were obtained by the Respondents and both oil seeds and oil produced were fully exempted, the Lower appellate authority's decision to treat the vegetable oil manufactured by the Respondents as equivalent to any other DTA Unit was deemed reasonable. The Government's specific prohibition on exporting vegetable oils due to scarcity in the country supported this view. Therefore, the order setting aside the demands was upheld, and the department's appeals were dismissed.
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