EOUs can use concessional rates for calculating CVD on goods cleared to DTA, tribunal affirms.

The tribunal affirmed that Export-Oriented Units (EOUs) can calculate additional duty of excise (CVD) using concessional rates under Notification No. 29/2004-CE or 30/2004-CE when clearing goods to Domestic Tariff Area (DTA). It was held that exemptions under relevant Customs and Excise Notifications must be considered for determining excise duties on goods cleared by EOUs to DTA. The Commissioner (Appeals) decision was upheld, dismissing the department's appeals and allowing EOUs to follow the principles established in judicial decisions for calculating CVD liability.

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Issues Involved:
1. Applicability of Notification No. 29/2004-CE to 100% Export-Oriented Units (EOUs).
2. Calculation of additional duty of excise (CVD) for goods cleared to Domestic Tariff Area (DTA) by EOUs.
3. Interpretation of Section 5A of the Central Excise Act, 1944 concerning exemptions for EOUs.

Issue-Wise Detailed Analysis:

1. Applicability of Notification No. 29/2004-CE to 100% Export-Oriented Units (EOUs):

The department argued that Notification No. 29/2004-CE does not specifically mention its applicability to EOUs, and thus, under Section 5A of the Central Excise Act, 1944, the concessional rate of duty in the notification is not applicable to EOUs. The respondents, however, contended that they calculated the additional duty of excise (CVD) based on the effective rate of 4% as per Notification No. 29/2004-CE while clearing goods to DTA, in compliance with Notification No. 23/2003-CE (Sl.No.2).

2. Calculation of additional duty of excise (CVD) for goods cleared to Domestic Tariff Area (DTA) by EOUs:

The tribunal examined the proviso to Section 5A, which states that unless specifically provided, no exemption shall apply to goods produced by EOUs. However, it was noted that for calculating the duty of excise for discharging CVD liability, any notification issued in respect of goods cleared by EOUs must be considered. The respondents calculated the CVD using the concessional rate of duty as per Notification No. 29/2004-CE or 30/2004-CE, not directly claiming the benefit but adopting it for CVD calculation purposes.

3. Interpretation of Section 5A of the Central Excise Act, 1944 concerning exemptions for EOUs:

The tribunal referenced several judicial decisions to interpret Section 5A. In UOI vs. Plastic Processors, the Supreme Court upheld that CVD was payable at effective rates, not tariff rates, on clearances made by EOUs into DTA. Similarly, in CCE, Lucknow vs. Srivatsa International Ltd, it was clarified that the CVD component for EOUs should be calculated based on the excise duty payable on like products produced in India, considering any concessional rates applicable.

The tribunal also cited Shanta Biotechnics Ltd, where it was held that for determining duties of excise under Section 3(1) of the Central Excise Act on goods cleared to DTA by EOUs, exemptions under relevant Customs and Excise Notifications must be provided. The duty payable by EOUs should be determined in the same manner as for imported goods, implying the applicability of concessional rates.

Conclusion:

The tribunal concluded that the Commissioner (Appeals) correctly appreciated the facts and applied the law by setting aside the demand. The appeals filed by the department were dismissed, affirming that EOUs could calculate CVD liability using the concessional rates under Notification No. 29/2004-CE or 30/2004-CE, following the principles laid out in relevant judicial decisions. The operative part of the order was pronounced in open court.

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