1995 (4) TMI 167 - AT - Central Excise

Tribunal grants exemption for Aluminium Billets used in export, clarifies retrospective effect of Notification

The Tribunal allowed the appeals, holding that the benefit of exemption under Notification No. 217/86-C.E. for Aluminium Billets used in the manufacture ... Exemption to intermediate product Issues Involved:1. Grant of exemption u/s Notification No. 217/86-C.E., dated 2-4-1986.2. Applicability of the proviso to Notification No. 217/86-C.E., dated 2-4-1986.3. Retrospective effect of amending Notification No. 33/92-C.E., dated 1-3-1992.4. Calculation of duty liability u/s 11A.5. Procedural lapses in execution of bonds for export units.Summary:1. Grant of Exemption u/s Notification No. 217/86-C.E., dated 2-4-1986:The primary issue was whether the appellants were entitled to the exemption provided by Notification No. 217/86-C.E., dated 2-4-1986 for Aluminium Billets used in the manufacture of Aluminium Extrusions. The lower authorities had denied this exemption, arguing that since the final product (Aluminium Extrusions) was cleared without payment of duty to units in free trade zones, the intermediate product (Aluminium Billets) was liable for duty.2. Applicability of the Proviso to Notification No. 217/86-C.E., dated 2-4-1986:The appellants contended that the extrusions cleared to Export Processing Zones or 100% Export Oriented Undertakings were not exempt from the 'whole of the duty' nor chargeable to 'Nil' rate of duty. The Tribunal noted that the proviso to Notification No. 217/86-C.E. would not apply to goods cleared to units in Free Trade Zones or 100% Export Oriented Units, as clarified by Notification No. 33/92-C.E., dated 1-3-1992.3. Retrospective Effect of Amending Notification No. 33/92-C.E., dated 1-3-1992:The Tribunal agreed with the appellants that the amending Notification No. 33/92-C.E., dated 1-3-1992, which clarified that the proviso to Notification No. 217/86-C.E. does not apply to goods cleared to Free Trade Zones or 100% Export Oriented Units, was clarificatory in nature and thus had retrospective effect.4. Calculation of Duty Liability u/s 11A:The appellants argued that the department's method of working backwards from the clearances of extrusions to calculate the duty on billets was erroneous and not contemplated u/s 11A. The Tribunal found that the demands could not be sustained as the clearances were made under bond and the method of calculation adopted by the department was not appropriate.5. Procedural Lapses in Execution of Bonds for Export Units:The Tribunal noted that the clearances made under bond did not fall within the ambit of the proviso to Rule 56A, as per the ruling of the WRB. Even in cases where no bond was executed, the Tribunal held that such non-execution was a procedural lapse and could not be a ground for denying the exemption, especially when the final products were utilized by export units.Conclusion:The Tribunal set aside the impugned orders and allowed the appeals, holding that the benefit of exemption Notification No. 217/86-C.E., dated 2-4-1986, could not be denied for Aluminium Billets used in the manufacture of Aluminium Extrusions cleared to export units. The Tribunal also recognized the retrospective effect of the clarificatory Notification No. 33/92-C.E., dated 1-3-1992.