EOU DTA clearance duty must reflect applicable customs exemptions when computing duty on like imported goods.

For duty on clearances by a 100% Export Oriented Undertaking to the Domestic Tariff Area under the proviso to Section 3(1) of the Central Excise Act, the customs duty leviable on like imported goods must be computed by taking applicable exemption notifications into account where their conditions are satisfied. The Tribunal treated Notifications No. 39/96-Cus. and 51/96-Cus. as relevant to that computation, following earlier reasoning that conditional customs exemptions can affect the assessable duty base. On that basis, the demand was not sustainable and the impugned duty and penalty were set aside.

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Issues: Whether, for clearances of goods by a 100% Export Oriented Undertaking to the Domestic Tariff Area, the exemption notifications applicable to like imported goods under Notification No. 39/96-Cus. and Notification No. 51/96-Cus. were to be taken into account while computing duty under the proviso to Section 3(1) of the Central Excise Act.

Analysis: Duty on DTA clearances by a 100% EOU is charged under the proviso to Section 3(1) of the Central Excise Act, and the amount payable is linked to the aggregate of customs duties leviable on like imported goods. The Tribunal treated the customs notifications relied on by the assessee as relevant to that computation, noting that a prior decision had already taken a conditional customs exemption notification into account for similar EOU clearances. The Tribunal held that the fact that the notifications were conditional did not prevent their consideration in quantifying the duty, since the material question was the rate of customs duty that would be leviable on like imported goods if imported into India.

Conclusion: The customs exemption notifications were required to be considered in computing the duty on the DTA clearances, and the demand could not be sustained.

Final Conclusion: The assessee's DTA clearances were held not liable to duty on the facts of the case, and the impugned demand and penalty were set aside.

Ratio Decidendi: For determining duty on DTA clearances by a 100% EOU under the proviso to Section 3(1) of the Central Excise Act, the customs duty that would be leviable on like imported goods must be computed by taking applicable exemption notifications into account, if their conditions are satisfied.

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