Duty-free clearances by 100% EOU remain available under Rule 19(2) despite excess over permitted limits.

A 100% Export Oriented Unit could claim duty-free clearances under Rule 19(2) of the Central Excise Rules, 2002 read with Notification No. 43/2001-C.E. (N.T.) where the supplies were made to buyers covered by that rule. The Tribunal held that Rule 19(2) does not exclude clearances by a 100% EOU, and that the fact the clearances exceeded the Development Commissioner's permitted limit did not by itself defeat the statutory benefit. It also treated Rule 19 and the notification as pari materia with the earlier Central Excise Rules, 1944 provisions. On that basis, the demand was not sustainable.

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Issues: Whether a 100% Export Oriented Unit could claim duty-free clearances under Rule 19(2) of the Central Excise Rules, 2002 read with Notification No. 43/2001-C.E. (N.T.) dated 26-6-2001.

Analysis: The clearances were beyond the limit permitted by the Development Commissioner, but the goods were supplied to a category of buyers covered by Rule 19(2). The rule does not exclude clearances from a 100% EOU. The Tribunal also relied on earlier decisions treating Rule 19 of the Central Excise Rules, 2002 and Notification No. 43/2001-C.E. (N.T.) as pari materia to the corresponding earlier provisions under the Central Excise Rules, 1944.

Conclusion: The appellant was entitled to the benefit of Rule 19(2) and the demand could not be sustained.

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