Countervailing duty on free trade zone scrap was held unsustainable where the exemption for excise duty applied.

Where central excise duty on goods is exempt, the corresponding additional duty under section 3 of the Customs Tariff Act is not leviable on scrap generated in a free trade zone and cleared to the domestic tariff area. The matter was treated as on the same footing as an earlier Tribunal decision, and no distinguishing factor was shown. On that basis, countervailing duty was held not sustainable, and the assessee's entitlement to refund under the exemption notification was upheld.

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Issues: Whether, in view of Notification No. 16/83-C.E. dated 11-2-1983, countervailing duty was leviable on scrap generated in the free trade zone and cleared to the domestic tariff area.

Analysis: The benefit of the exemption notification had already been extended by the lower appellate authority on the footing that where central excise duty on the goods is exempt, the corresponding additional duty under Section 3 of the Customs Tariff Act is not leviable. The case was found to stand on the same footing as the earlier Tribunal decision relied upon by the lower appellate authority, and no distinction was shown to justify a different view.

Conclusion: The levy of countervailing duty was held not sustainable, and the assessee's entitlement to refund under the exemption notification was upheld.

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