Inter-unit transfer of HSD oil by a 100% EOU became dutiable after amendment barred fuel clearances to another unit.

Notification No. 35/02, effective from 24.06.02, barred inter-unit transfer of raw materials, consumables and fuels by a 100% EOU whether the recipient unit was inside or outside the zone. Transfers of HSD oil made during 24.06.02 to 03.07.02 therefore fell under the amended restriction and became dutiable. The later withdrawal of permission in 2003 did not change the position, because the amendment itself had already removed the earlier protection for such clearances. The duty demand was accordingly upheld.

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Issues: Whether duty was payable on transfer of HSD oil by a 100% EOU to another unit during the period after the amendment to Notification No. 1/95-CE, and whether the earlier permission continued to protect such clearances.

Analysis: The amendment introduced by Notification No. 35/02 with effect from 24.06.02 barred inter-unit transfer of raw materials, consumables and fuels, whether the recipient unit was within or outside the zone. Since the transfers in question were made during 24.06.02 to 03.07.02, the amended notification governed the clearances. The subsequent communication withdrawing permission in 2003 did not alter the legal position created by the amendment already in force.

Conclusion: The duty demand was correctly upheld and the appeal was liable to be rejected.

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