EOU Unit Granted Central Excise Duty Exemption for Domestic Clearances

The Tribunal held that the appellant-assessee, a 100% EOU unit, was eligible to avail exemption under Notification No.6/2006-CE when clearing goods to the domestic tariff area. The duty calculation under the proviso to Section 3 of the Central Excise Act, 1944, was deemed to warrant the application of the Notification, as it exempted goods manufactured in India. The Tribunal dismissed the Revenue's appeal and allowed the appellant-assessee's appeal, granting the benefit of the exemption and disposing of the stay application.

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Issues: Eligibility of exemption under Notification No.6/2006-CE for goods cleared from EOU to DTA in terms of duty calculation under Section 3 proviso of Central Excise Act, 1944.

In this case, the Appellate Tribunal CESTAT Kolkata heard an appeal by the Revenue against the order of the Commissioner of Central Excise(Appeal-I), Kolkata, regarding the eligibility of the appellant-assessee to avail exemption under Notification No.6/2006-CE while clearing goods from EOU unit to DTA in accordance with duty calculation under Section 3 proviso of the Central Excise Act, 1944. The appellant-assessee had earlier faced duty denial under the said Notification for a previous period. The appellant sought waiver of pre-deposit, citing settled issues in their favor by the Tribunal and the Gujarat High Court in similar cases. The Tribunal decided to take up both appeals together as the issue was identical for the same appellant-assessee, waiving the pre-deposit requirement for the appellant's appeal as well. The central point of dispute was the availability of exemption under Notification No.6/2006-CE to the appellant-assessee, a 100% EOU unit clearing goods to the domestic tariff area. The duty payable for such clearance was determined by the proviso to Section 3 of the Central Excise Act, 1944, which mandates that duty should be equivalent to the aggregate of customs duties applicable to goods produced outside India if imported into India. The Revenue argued that the Notification did not explicitly state its applicability to goods produced in a 100% EOU, thus claiming duty calculation without extending the benefit of the Notification. However, the Tribunal noted that the Notification unconditionally exempted goods manufactured in India, and since the duty calculation for goods cleared to DTA was considered akin to importing goods into India, the Notification was rightly applicable. The Tribunal also referenced a clarification from the Director General of Export Promotion (CBEC) and previous Tribunal decisions supporting the appellant's position. Consequently, the Tribunal held that the appellant-assessee could avail the exemption under Notification 6/2006-CE while calculating the duty under the proviso to Section 3. The appeal by the Revenue was dismissed, and the appeal by the appellant-assessee was allowed, with the stay application also being disposed of accordingly.

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