Chapter X exemption for 100% EOU clearances under CT-2 forms upheld under excise rules

Rule 13 of the Central Excise Rules, 1944 and Notification No. 47/94 (N.T.) permitted removal of specified materials without payment of duty for use in the manufacture of export goods under the prescribed Chapter X procedure. The text states that neither Rule 13, the notification, Chapter V-A, nor Rule 100H excluded a 100% Export Oriented Unit from using that procedure, and the proviso to Section 5A of the Central Excise Act, 1944 was inapplicable because the notification was not issued under that section. Accordingly, where the goods were cleared under the prescribed procedure, exemption could not be denied merely because the supplier was a 100% EOU, and the demand and penalty were not sustainable.

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Issues: Whether Rule 13 of the Central Excise Rules, 1944 and Notification No. 47/94 (N.T.) dated 22-2-94 applied to a 100% Export Oriented Unit clearing goods to a manufacturer-exporter against CT-2 forms.

Analysis: Rule 13 permitted removal of specified materials without payment of duty for use in the manufacture of export goods under bond, and Notification No. 47/94 (N.T.) allowed such removals subject to compliance with Chapter X procedure. Nothing in Rule 13, the notification, Chapter V-A, or Rule 100H excluded a 100% Export Oriented Unit from availing that procedure. The proviso to Section 5A of the Central Excise Act, 1944 was also inapplicable because the notification was not issued under Section 5A. Since the goods were cleared under the prescribed Chapter X procedure, the exemption could not be denied merely because the manufacturer was a 100% EOU.

Conclusion: The benefit of Rule 13 and Notification No. 47/94 (N.T.) was available to the assessee, and the demand and penalty could not be sustained.

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