EOU clearing imported goods to DTA liable only for customs duty under Section 28, not central excise duty

CESTAT Ahmedabad ruled in favor of appellant EOU regarding duty payment on goods cleared to DTA. The tribunal held that when EOU clears imported goods to DTA, only customs duty is payable under Section 28 of Customs Act, 1962, not central excise duty. The show cause notice issued under Section 11A(5) of Central Excise Act for recovering customs duty was void ab initio as wrong provision was invoked. Cenvat credit cannot be utilized for customs duty payment. The impugned order was set aside and appeal allowed.

---

---

Issues:
1. Utilization of cenvat credit for payment of duty on goods cleared to domestic tariff area (DTA) by an Export Oriented Unit (EOU).
2. Dispute over whether duty payable on such clearance is central excise duty or customs duty.
3. Challenge to the show cause notice issued under Section 11A demanding payment of duty.
4. Interpretation of Notification 52/2003-Cus regarding duty liability on goods cleared to DTA.
5. Discrepancy between the order-in-original and the order-in-appeal.
6. Applicability of legal precedents in similar cases.

Analysis:
1. The appellant, an EOU, imported goods under Notification 52/2003-Cus and cleared some to DTA, paying duty by debiting cenvat credit account. Central Excise Revenue Audit objected, demanding cash payment instead of cenvat credit utilization.
2. The dispute centered on whether the duty payable was central excise duty or customs duty. The Commissioner (Appeals) held that only customs duty could be demanded for goods cleared in violation of the notification, not central excise duty as no manufacturing process was involved.
3. The show cause notice invoked Cenvat Credit Rules to demand cash payment of duty, leading to a challenge by the appellant. The Tribunal found that the notice demanding central excise duty was improper as the duty in question was customs duty, not covered by the invoked provisions.
4. Notification 52/2003-Cus required utilizing goods for manufacturing within the EOU, with customs duty liability if cleared to DTA. The Tribunal clarified that the duty payable on such clearance was customs duty, not central excise duty.
5. Discrepancies between the order-in-original and order-in-appeal were noted, with the latter focusing on customs duty while the former addressed central excise duty. The Tribunal found the show cause notice void ab initio due to improper invocation of Section 11A for demanding customs duty.
6. Legal precedents, including the Matrix Laboratories case, were cited to support the Tribunal's decision that only customs duty could be demanded for goods cleared to DTA by an EOU, not central excise duty. The appeal was allowed, and the impugned order was set aside.

This detailed analysis covers the issues raised in the judgment, addressing the utilization of cenvat credit, the distinction between central excise duty and customs duty, the validity of the show cause notice, interpretation of Notification 52/2003-Cus, discrepancies in orders, and the application of legal precedents to the case.

---