Conditional exemption notification applies in computing duty on DTA clearances by a 100% export oriented unit.

Duty on DTA clearances by a 100% export oriented unit is to be computed under Notification No. 2/95-C.E. read with the proviso to Section 3(1) of the Central Excise Act, by reference to customs duties under Section 12 of the Customs Act and notifications issued under Section 25(1). A conditional exemption notification applicable to like goods must be taken into account in that computation, including for exclusion of countervailing duty. The competing view that the notification could not apply because the goods were treated as imported goods was rejected, and the benefit of the exemption was sustained.

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Issues: Whether the benefit of Notification No. 15/94-C.E. dated 1-3-94 could be taken into account while quantifying the duty payable by a 100% export oriented unit on goods cleared to the domestic tariff area, so as to exclude the component of countervailing duty.

Analysis: The duty payable on DTA clearances by a 100% export oriented unit had to be computed in terms of Notification No. 2/95-C.E. read with the proviso to Section 3(1) of the Central Excise Act, with reference to the customs duties leviable under Section 12 of the Customs Act, 1962 and notifications issued under Section 25(1) of that Act. The Tribunal treated the earlier decision in Kudremukh Iron Ore as squarely applicable, holding that a conditional exemption notification governing like goods had to be considered in the computation of excise duty payable on DTA clearances by a 100% export oriented unit. The competing view that the condition in Notification No. 15/94-C.E. could not apply because the goods were imported goods was rejected.

Conclusion: The exemption notification was rightly applied in quantifying the duty, and the exclusion of countervailing duty was sustained.

Final Conclusion: The Revenue's challenge failed, and the order granting the benefit to the assessee was upheld.

Ratio Decidendi: Where duty on DTA clearances by a 100% export oriented unit is to be quantified with reference to customs duties, a relevant conditional exemption notification applicable to like goods must be taken into account in the computation.

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