Customs exemption for 100% EOU clearances depends on refinery use of finished goods, requiring fresh factual verification.

For DTA clearances by a 100% EOU, the assessable duty is to be computed as fifty per cent of the customs duty leviable on like imported goods, and any applicable customs exemption must be factored into that computation. The exemption under Notification No. 21/2002-Cus was treated as depending on whether the finished goods were meant for use in a crude petroleum refinery. The earlier rejection, based on nil-duty import of raw material under a separate EOU notification, was held not ative of the duty position for the finished goods. The matter was remanded for factual verification of the intended refinery use and reconsideration on the correct legal basis.

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Issues: Whether finished goods manufactured by a 100% Export Oriented Unit and supplied for setting up a crude petroleum refinery were eligible for exemption under Notification No. 21/2002-Cus for the purpose of computing duty under Notification No. 23/2003-CE.

Analysis: The applicable duty for DTA clearance by a 100% EOU is fifty per cent of the customs duty leviable on like imported goods, and any applicable customs exemption must also be considered while determining that duty. The exemption under Notification No. 21/2002-Cus was treated as dependent on the goods being meant for a crude petroleum refinery. The rejection by the lower authority proceeded on the footing that the raw material had been imported at nil duty under a separate EOU notification, which did not determine the duty position of the finished goods cleared by the EOU. The proper enquiry was whether the goods supplied were in fact meant for use in the refinery, and the record indicated that this aspect required factual verification.

Conclusion: The exemption claim required reconsideration on the correct legal basis, the impugned order was set aside, and the matter was remanded to the adjudicating authority.

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