2010 (5) TMI 267 - AT - Customs

Export Oriented Undertaking Wins Duty Dispute on Additional Excise Duty Calculation

The Tribunal ruled in favor of the appellant, a 100% Export Oriented Undertaking, in a dispute regarding the interpretation of Notification No.23/03-CE. ... Export Oriented Undertaking- There was the issue of short payment of duty. The appellant has paid Excise duty @ 50% of the aggregate duties of Customs which comes to 25.56% Adv.[BCD 20%, CVD (BED 16% and SED 8%, Addl. Duty (T&TA)15%] = 53.12% during the period from 9.1.04 to 28.2.04. However, in terms of proviso of Sr.No.2 of Table appended to Notification No.23/2003-CE, dt.1.3.03, the duty payable in accordance with this notification in respect of said goods shall not be less than the duty of Excise leviable on like goods produced or manufactured outside the EOU which is specified in the said schedule with any other relevant notification issued under Section 5A(1) of the Central Excise Act, 1944. lower authority confirm the demand. Held that- the duty paid by the appellant is more than the duty required to be paid by the domestic unit. As rightly contended, AED (T&TA) is not part of Section 3 leviable mentioned in the schedule 1 and 2 and as such, cannot be taken into consideration for examining the fulfillment of the conditions laid down in the said proviso. Thus, set aside the impugned order and allow the appeal. Issues:Interpretation of Notification No.23/03-CE, dt.31.3.03 regarding the duty payable on goods produced in Export Oriented Undertakings.Analysis:The case involved the appellant, a 100% EOU, who cleared Polyester Texturised Yarn in DTA and paid Excise duty as per proviso to Section 3(1) of Central Excise Act, 1944 read with Notification No.23/2003-CE. The appellant paid Excise duty @ 50% of the aggregate duties of Customs, which was 25.56% during a specific period. However, a discrepancy arose as the duty payable should not be less than the duty of Excise leviable on like goods produced outside the EOU. The duty leviable on like goods produced outside EOU came to 27.60%, resulting in a short payment of Excise duty by the appellant. A show cause notice was issued, confirming the demand of duty along with interest and penalty, which was upheld by the lower authorities, leading to the present appeal.The dispute primarily revolved around the interpretation of Notification No.23/03-CE, dt.31.3.03. The notification exempted excisable goods produced in export-oriented undertakings from a portion of the duty leviable under Section 3 of the Central Excise Act. The key contention was whether the duty paid by the appellant, considering both BED and SED, exceeded what a manufacturing unit producing like goods would have paid. The Commissioner (Appeals) interpreted the expression 'in the said schedule' to cover both Schedule 1 and Schedule 2 of the Central Excise Tariff Act, leading to a conclusion that the duty paid by the appellant was in excess of what a domestic unit would pay.The appellant argued that the Additional Excise Duty (AED) under the Textile and Textile Articles Act should not be considered while calculating the duty payable on goods produced outside export-oriented undertakings. It was contended that AED (T&TA) is not part of Section 3 levy and does not fall under the proviso. The Tribunal agreed with this argument, stating that the proviso only relates to duty specified in the said schedule and that AED (T&TA) should not be taken into consideration for fulfilling the conditions laid down in the proviso. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant, providing consequential relief.In conclusion, the Tribunal's decision clarified the scope of duty payable by export-oriented undertakings, emphasizing the exclusion of certain duties like AED (T&TA) from the calculation. The judgment highlighted the importance of interpreting statutory notifications accurately to determine the correct duty liability in such cases.