2015 (1) TMI 214 - AT - Central Excise

100% EOU Eligible for Exemption under Notification 7/2003-C.E. for DTA Clearances

COMMISSIONER OF C. EX., JAIPUR-I Versus PARAS FAB INTERNATIONAL

The tribunal upheld the Commissioner (Appeals)' decision, affirming that a 100% EOU is eligible to avail the exemption under Notification No. 7/2003-C.E. ... 100% EOU - Benefit of the exemption of Notification No. 7/2003-C.E., dated 1-3-2003 on the DTA clearance - Penalty under Rule 25 - Held that:- As is seen from the reproduced portion of Commissioner (Appeals) order that he has relied upon the Board Circular 305/113/94-FTT, dated 19-2-98. Revenue in their memo of appeal have nowhere contended that the said decisions are not applicable to the facts of the present case or same have been reversed by any higher appellant form. In terms of the Board clarification the goods manufactured by 100% EOU have to be treated as having been produced in India, in so far the same relates to DTA clearance and the effective rate of duty is applicable in respect of such goods. The Tribunal in the relied upon decisions has taken note of the said clarification by the Board and has laid down that the clearances by 100% Export Oriented Units to Domestic Tariff Area would attract effective rate of duty fixed under exemption notification issued under Section 5A of Central Excise Act, 1944. As such, we find not reasons to take a different view. - Decided against Revenue. Issues:1. Interpretation of Notification No. 7/2003-C.E.2. Applicability of exemption to 100% EOU3. Effective rate of duty vs. Tariff rateInterpretation of Notification No. 7/2003-C.E.:The case involved a dispute regarding the interpretation of Notification No. 7/2003-C.E., dated 1-3-2003, under Section 5A of the Central Excise Act, 1944. The Appellants, a 100% EOU engaged in manufacturing Terry Towels, availed the benefit of this exemption on DTA clearance, paying Central Excise duty at 10% instead of the tariff rate of 16%. The impugned order demanded duty, interest, and imposed a penalty, contending that the exemption did not apply to 100% EOU. The Commissioner (Appeals) allowed the appeal, citing CBEC clarifications and tribunal decisions supporting the view that duty should be levied at the effective rate, not the tariff rate, for goods cleared in DTA.Applicability of exemption to 100% EOU:The main issue revolved around whether the Appellants, being a 100% EOU, were eligible to avail the benefit of the exemption under Notification No. 7/2003-C.E. The Commissioner (Appeals) referenced CBEC clarifications and tribunal decisions to support the Appellants' eligibility for the exemption. The tribunal decisions highlighted that goods manufactured by 100% EOU should be treated as produced in India for DTA clearance, and the effective rate of duty under the exemption notification should apply. The Appellants' eligibility for the exemption was affirmed based on these interpretations and precedents.Effective rate of duty vs. Tariff rate:The crux of the matter was determining whether the duty should be levied at the effective rate or the tariff rate for goods cleared in DTA by the 100% EOU. The Commissioner (Appeals) and tribunal decisions emphasized that the effective rate of duty fixed under the exemption notification should apply in such cases, as clarified by the CBEC. The tribunal rejected the revenue's appeal, noting that the decisions relied upon were applicable to the case at hand, and there was no reason to deviate from the established interpretation. Consequently, the tribunal upheld the Commissioner (Appeals) decision, emphasizing the applicability of the effective rate of duty for DTA clearances by 100% EOU.