EOU DTA duty benchmark must include domestic exemption where conditions are met, with notification benefit upheld.

For duty on DTA clearances by a 100% EOU under Notification No. 101/93-C.E., the benchmark had to be the duty leviable on like domestic goods, so Notification No. 19/88-C.E. could be relied on where it granted nil excise duty on the relevant Chapter 26 goods. The exemption could not be excluded merely because the goods were cleared by an EOU, and the non-availment of input credit condition did not defeat the benefit because no breach of that condition was shown on the record. The assessee was therefore entitled to the notification benefit, and the higher tariff rate was not applied.

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Issues: (i) Whether Notification No. 19/88-C.E. dated 1-3-1988 could be taken into account while determining the duty payable on clearances by a 100% export oriented undertaking under Notification No. 101/93-C.E. dated 27-12-1993; (ii) whether the condition in Notification No. 19/88-C.E. regarding non-availment of credit under Rule 56A or Rule 57A of the Central Excise Rules, 1944 prevented the assessee from claiming the exemption.

Issue (i): Whether Notification No. 19/88-C.E. dated 1-3-1988 could be taken into account while determining the duty payable on clearances by a 100% export oriented undertaking under Notification No. 101/93-C.E. dated 27-12-1993.

Analysis: The duty on DTA clearances by a 100% EOU under Notification No. 101/93-C.E. had to be compared with the duty leviable on like goods manufactured in India outside the EOU scheme, because the first proviso to that notification fixed a floor linked to domestic excise duty. Notification No. 19/88-C.E., which exempted Chapter 26 goods from the whole of the duty of excise, therefore had direct relevance in determining the benchmark duty. The exclusion of the notification merely because the goods were manufactured by a 100% EOU was not accepted.

Conclusion: The notification was applicable for determining the correct duty payable, and the assessee was entitled to rely on it.

Issue (ii): Whether the condition in Notification No. 19/88-C.E. regarding non-availment of credit under Rule 56A or Rule 57A of the Central Excise Rules, 1944 prevented the assessee from claiming the exemption.

Analysis: The exemption under Notification No. 19/88-C.E. was conditional, but the record did not show any credit of duty paid on inputs having been taken by the 100% EOU in the manufacture of iron ore pellets. Since the condition was not breached, the benefit of nil excise duty under the notification could not be denied.

Conclusion: The condition did not bar the assessee from claiming the notification benefit.

Final Conclusion: The correct duty on the assessee's DTA clearances was not the tariff rate of 10% ad valorem, and the classification adopted by the assessee was upheld with consequential relief.

Ratio Decidendi: Where a 100% EOU's DTA clearance duty under a special notification is benchmarked against domestic excise duty, a valid exemption available to comparable domestic goods must be taken into account, and the exemption cannot be denied unless its specific conditions are shown to be unfulfilled.

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