Cum-duty valuation and excise exemption limits shape duty liability on DTA clearances by a 100% EOU.

Goods cleared by a 100% Export-Oriented Unit to the Domestic Tariff Area were treated as not covered by the claimed exemption from additional duty of excise under the applicable notification, so the levy was maintained. The assessable value was then required to be recomputed on a cum-duty basis where the realised price formed the basis of collection, meaning duty had to be calculated after excluding the duty component from the sale price. On the facts recorded, the penalty was not sustainable and was deleted, leaving only partial relief on quantum.

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Issues: (i) Whether the goods cleared by the 100% Export-Oriented Unit to the Domestic Tariff Area were exempt from additional duty of excise under the applicable notification. (ii) Whether the assessable value had to be reworked on a cum-duty basis and whether the penalty imposed was sustainable.

Issue (i): Whether the goods cleared by the 100% Export-Oriented Unit to the Domestic Tariff Area were exempt from additional duty of excise under the applicable notification.

Analysis: The exemption claim was tested against the later amending notification and the governing judicial view. In light of the binding precedent relied upon, the earlier exemption notification was held not to govern the levy for the relevant clearances.

Conclusion: The exemption claim failed and the levy of additional duty of excise was upheld.

Issue (ii): Whether the assessable value had to be reworked on a cum-duty basis and whether the penalty imposed was sustainable.

Analysis: The duty demand was found to require recalculation by treating the realised price as cum-duty price. The dispute was of a legal character and the penalty could not be sustained on the facts recorded.

Conclusion: The duty was required to be reworked on a cum-duty basis and the penalty was set aside.

Final Conclusion: The liability to duty was maintained, but the quantum was directed to be recalculated on cum-duty basis and the penalty was deleted, leaving the appellant with partial relief.

Ratio Decidendi: Where duty is sustained on a transaction where the realised price is the basis of collection, the assessable value must be reworked on cum-duty principles, and a legal dispute on levy may justify deletion of penalty.

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