2023 (10) TMI 423 - AT - Central Excise

Tribunal rules in favor of EOU in excise duty dispute, highlights importance of notification compliance

The Tribunal held that the demand for excise duty, interest, and penalties against a 100% Export Oriented Unit (EOU) manufacturing terry towels/fabrics ... 100% EOU - Valuation - terry towels / terry fabrics of cotton falling under chapter 63 of the Central Excise Tariff Act 1985 - failure to adopt 8% ad valorem as per the Central Excise Tariff Act, 1985 while calculating the CVD in respect of clearances effected to DTA as provided in N/N. 23/2003 CE dated 31/3/2003 read with section 3 of Central Excise Act 1944 - HELD THAT:- The issue stands squarely covered by the decision of the Tribunal in the appellant’s own case in COMMISSIONER OF CENTRAL EXCISE, SALEM VERSUS SRI GUGAN MILLS AND SARADHA TERRY TOWELS LTD. [2018 (6) TMI 908 - CESTAT CHENNAI] where it was held that In UOI vs Plastic Processors [2005 (4) TMI 581 - SUPREME COURT], the hon’ble Apex Court has held that CVD was payable at effective rates and not at tariff rates on clearances made by 100% EOU into DTA. The demand cannot be sustained. The impugned order is set aside - Appeal allowed. Issues involved: The issues involved in this case are the calculation of Central Value Duty (CVD) by a 100% Export Oriented Unit (EOU) for clearances to the Domestic Tariff Area (DTA) and the applicability of notification No. 23/2003 CE dated 31/3/2003.Summary of Judgment:Issue 1: Calculation of CVD for clearances to DTA by EOUThe appellant, a 100% EOU manufacturing terry towels/fabrics, failed to adopt 8% ad valorem while calculating CVD for clearances to DTA. A Show Cause Notice was issued proposing to demand excise duty, interest, and penalties. The original authority confirmed the demand, which was upheld by the Commissioner (Appeals). The appellant argued that a previous Tribunal decision favored them. The Tribunal found the issue covered by the previous decision, emphasizing the need to consider notifications for calculating duty for CVD liability. The Tribunal noted that the appellant adopted concessional rates for CVD calculation under notification 29/2004 or 30/2004 to claim exemption under notification 23/2003 for clearances to DTA. Consequently, the Tribunal dismissed the department's appeals, setting aside the demand and allowing the appellant's appeal with consequential relief.Decision:The Tribunal held that the demand cannot be sustained, setting aside the impugned order and allowing the appeal with consequential relief.This judgment clarifies the application of notifications for calculating duty on CVD for clearances to DTA by a 100% EOU, emphasizing the need to consider relevant notifications in determining duty liability. The Tribunal's decision aligns with previous rulings, providing guidance on interpreting and applying excise duty provisions in such cases.