EOU DTA clearances under export policy and exemption notification upheld; amended excise proviso did not impliedly repeal relief.

The SC held that a 100% export-oriented unit could undertake job-work for a DTA unit and clear the finished goods to DTA on payment of duty because the export policy and the exemption notification permitted such clearances. It construed "sale" under the Central Excise Act in its statutory sense, not by importing the Sale of Goods Act meaning, and treated the clearance regime under the policy as applicable. The Court also rejected implied repeal: the amended proviso to section 5A and section 3(1) did not nullify a notification that specifically covered DTA sales by a 100% EOU in accordance with the policy. The exemption therefore remained available.

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Issues: (i) Whether a 100% export-oriented unit could undertake conversion on behalf of a DTA unit and clear the finished goods to DTA on payment of duty under the Export and Import Policy and the exemption notification. (ii) Whether the amended proviso to section 5A of the Central Excise Act, 1944 and section 3(1) of that Act denied the benefit of exemption to such clearances or impliedly repealed the notification.

Issue (i): Whether a 100% export-oriented unit could undertake conversion on behalf of a DTA unit and clear the finished goods to DTA on payment of duty under the Export and Import Policy and the exemption notification.

Analysis: The expression "sale" under section 2(h) of the Central Excise Act, 1944 was construed in its statutory sense, namely transfer of possession for valuable consideration, and not by importing the narrower concept under the Sale of Goods Act, 1930. The relevant provisions of the Export and Import Policy, especially paragraph 9.9(b), permitted DTA clearances subject to duty, while paragraph 9.17(b) operated in a different field. The subsequent customs circular extended job-work facility to all sectors, and the Development Commissioner had also clarified that the activity was permissible and that duty could be paid on the assessable value comprising raw material value plus conversion charges. The clearance thus fell within the permitted regime.

Conclusion: The job-work and DTA clearance were permissible, and the assessee was entitled to the benefit of the exemption notification.

Issue (ii): Whether the amended proviso to section 5A of the Central Excise Act, 1944 and section 3(1) of that Act denied the benefit of exemption to such clearances or impliedly repealed the notification.

Analysis: The proviso to section 5A(1) was read harmoniously with the substantive exemption power, and the phrase "unless specifically provided in such notification" was given full effect. The notification specifically covered finished products of a 100% EOU allowed to be sold in India in accordance with paragraph 9.9(b) of the policy, and the amendment to the proviso in section 5A did not create any irreconcilable conflict or exhaustive code so as to wipe out the notification by implication. The court therefore rejected the plea of implied repeal and held that the statutory scheme continued to allow a specific exemption where the notification expressly so provided.

Conclusion: The amended provisions did not take away the exemption, and the assessee remained entitled to the notification benefit.

Final Conclusion: The revenue's challenge failed because the assessee's DTA clearances were within the permitted policy framework and the exemption notification remained operative for such transactions.

Ratio Decidendi: Where a specific exemption notification expressly covers DTA clearances by a 100% EOU in accordance with the export policy, the later amendment to the general charging or exemption proviso does not impliedly repeal that notification, and the statutory term "sale" in the excise law must be given its own wider meaning in the fiscal context.

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