Concessional duty for EOU scrap depends on approved input-output norms and verification of clearances within SION limits.

Scrap generated by a 100% export oriented unit and cleared into the Domestic Tariff Area was examined for concessional duty under Notification No. 23/2003. The initial denial was based on the absence of input-output norms at the time of clearance, but the later fixation of standard input-output norms by DGFT meant the benefit could not be excluded on that ground alone. Entitlement was held to depend on whether the scrap clearances fell within the approved SION limits, so the matter was remanded for verification of the quantity of scrap cleared and recalculation of duty.

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Issues: Whether scrap generated by a 100% export oriented unit and cleared into the Domestic Tariff Area was eligible for concessional duty under Notification No. 23/2003 dated 31.3.2003 when input-output norms were fixed only subsequently, and whether the demand required reconsideration in light of the later fixation of norms.

Analysis: The clearance of scrap was disputed on the footing that no input-output norms were available at the time of clearance, so the clearances were treated as unauthorised and the benefit of the notification was denied. The record showed that the Directorate General of Foreign Trade had since fixed the standard input-output norms, and the benefit of concessional duty was available where the scrap had been permitted to be cleared in the Domestic Tariff Area. The only remaining exercise was verification of the quantity of scrap cleared during the relevant periods and examination of the claim within the approved SION limits.

Conclusion: The appellant was held entitled to consideration of the concessional duty benefit subject to the approved SION limits, and the matter was remanded for verification of the quantum of scrap and recalculation of duty.

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