Exemption for DTA clearances turns on indigenous manufacture proof, while register requirements under an inapplicable notification cannot be enforced.

A 100% EOU's clearances were found outside the scope of Notification No. 8/1997-C.E., so the register-maintenance requirements prescribed for units operating under that notification could not be insisted upon. For exemption under Notifications No. 6/1997-C.E. and 23/2003-C.E., the appellant had to establish to the satisfaction of the adjudicating authority that the goods sold in the DTA were manufactured from indigenous raw materials. The matter was therefore remitted for de novo adjudication on the exemption claim, with an opportunity to produce and examine evidence.

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Issues: (i) Whether the appellant's clearances were covered by Notification No. 8/1997-C.E. and whether the registers prescribed by the circulars issued in that context were required to be maintained. (ii) Whether exemption under Notification Nos. 6/1997-C.E. and 23/2003-C.E. depended on proof that the goods sold in the Domestic Tariff Area were manufactured out of indigenous raw materials.

Issue (i): Whether the appellant's clearances were covered by Notification No. 8/1997-C.E. and whether the registers prescribed by the circulars issued in that context were required to be maintained.

Analysis: The appellant was a 100% EOU and the goods in dispute were not chargeable to duty in the domestic sector during the relevant period. In that situation, Notification No. 8/1997-C.E. had no application, and the register-maintenance requirements prescribed by the circulars meant for units functioning under that notification could not be insisted upon.

Conclusion: The issue is decided in favour of the appellant; Notification No. 8/1997-C.E. did not apply and the prescribed registers were not required.

Issue (ii): Whether exemption under Notification Nos. 6/1997-C.E. and 23/2003-C.E. depended on proof that the goods sold in the Domestic Tariff Area were manufactured out of indigenous raw materials.

Analysis: For availing the exemption under those notifications, the appellant was required to establish to the satisfaction of the lower authorities that the goods sold in the DTA were manufactured from indigenous raw materials. The evidence already produced, and any further evidence to be produced in de novo proceedings, had to be examined by the Original Authority after giving the appellant an adequate opportunity of hearing.

Conclusion: The issue is left for fresh determination on remand, with the appellant required to prove indigenous manufacture before exemption can be granted.

Final Conclusion: The impugned order was set aside for limited reconsideration, the matter was remitted to the Original Authority for de novo adjudication on the exemption claim, and the appeal succeeded to that extent.

Ratio Decidendi: Where goods cleared from a 100% EOU are not covered by the notification relied upon for domestic-sector duty liability, the registers prescribed under that notification cannot be demanded, while exemption under a separate exemption notification turns on proof of indigenous manufacture to the satisfaction of the adjudicating authority.

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