TaxTMI 
TaxTMI 
2013 (6) TMI 680
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....duty. Dispute is relating to the applicable rate of duty relating to such clearances. Appellants were issued four show cause notices covering the period Sept., 2005 to Nov., 2008. As the issue involved/type of yarns is varying in the four show cause notices, the four show cause notices/corresponding Order-in-Originals/Appeals are briefly enumerated below : 3.1 Appeal No. E/1092/2007-Mum. :- This appeal is against Order-in-Original No. 06/MS/(06)/COMMR/RGD/07-08, dated 26-4-2007 in respect of show cause notice F. No. V/ADJ/(SCN)15-110/RGD/06, dated 9-10-2006 involving period from September, 2005 to Feb., 2006. During this period, appellant cleared in DTA (i) Cotton Yarn (52.05) by paying duty vide Sr. No. 3 of Notification No. 23/2003-C.E. Demand notice proposed Sr. No. 4 of 23/2003-C.E. (30% of Customs duty) read with Notification No. 30/2004-C.E. Adjudicating authority in the impugned order dropped the demand; (ii) Acrylic Yarn (55.09) and Blended Polyester Yarn (Cotton + Polyester) (55.09) by paying duty vide Sr. No. 4 of Notification No. 23/2003-C.E. i.e. 30% of the Customs duty. However, 30% customs duty was paid on ....
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....; Cotton Yarn (52.05) without payment of duty claiming to be covered by Sr. No. 3 of Notification No. 23/2003-C.E. read with Notification No. 30/2004-C.E. Demand notice proposed Sr. No. 4 of Notification No. 23/2003-C.E., which is 30% of Customs duty. Here Basic Customs Duty taken was 12.5% and CVD 4% (as per Notification No. 29/2004-C.E.). Adjudicating authority upheld the demand and held that in view of proviso to Section 5A(1) of Central Excise Act, 1944 benefit of Notification No. 30/2004-C.E. cannot be extended. (ii) Cotton Waste (52.02) without payment of duty claiming to be covered by Sr. No. 3 of 23/2003-C.E. and excise duty being NIL as per Tariff rate. Demand notice proposed Sr. No. 4 of Notification No. 23/2003-C.E. which is 30% of Customs duty. Here basic Customs duty was taken as 15% and CVD 16% Adjudicating authority upheld the demand. 3.4 E/1344/2010-Mum. :- This appeal is against Order-in-Original No. 17/SR/(17)COMMR/RGD/09-10, dated 26-3-2010 in respect of show cause notice F. No. V/Adj(SCN)15-235/HETL/Rgd/08-09, dated 3-4-2009 involving period from March 2008 to November 2008. During this period, appellant cleared in ....
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....e for exemption. (iv) In any case, while calculating demand under Serial No. 2 of the EOU Notification, benefit of Notification No. 30/2004-C.E. (in case of BED) & Notification No. 31/2004-C.E. (in case of AED in appeal No. E/1344/10) is available. Proviso to Section 5A(1) is not applicable under such circumstances. In support of this contention following case laws were mentioned (i) Ratangiri Textiles v. CCE [2003 (161) E.L.T. 975 (T)] (ii) CCE v. Shanta Biotechnics [2010 (259) E.L.T. 447 (T)] (iii) CCE v. Modern Terry Towel - Final Order No. A/1985/2008-WZB/AHD, dated 4-9-2008 by Hon'ble CESTAT, Ahmedabad (iv) CC v. Ashima Dyecot [2011 (267) E.L.T. 122 (T)] (v) Demand of duty on cotton yarn & cotton waste (in appeal No. E/1075/2008) is incorrect. Order-in-Original in Appeal No. E/1092/2007 has specifically dropped the demand on cotton yarn which has not been challenged by the Revenue. Such demand has not been raised in other periods even though there were clearances of cotton yarn & cotton waste in those periods. 5. Ld. A.R.....
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....t is expedient to consolidate and amend the law relating to Central duties of excise on goods manufactured or produced in certain part of India".                       (emphasis supplied) 7.2 Section 1(2) of the said Act state that it extends to the whole of India. 7.3 Section 3 which is the changing Section for levy of duty reads as under :- SECTION 3. Duties specified in First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 to be levied. - (1) There shall be levied and collected in such manner as may be prescribed, - (a) a duty of excise to be called the Central Value Added Tax (Cenvat)] on all excisable goods (excluding goods produced or manufactured in special economic zones) which are produced or manufactured in India as, and at the rates, set forth in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); (b) a special duty of excise, in addition to the duty of excise specified in clause (a) above, on excisable goods (excluding goods produce....
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....entral Value Added Tax (Cenvat) on all excisable goods produced or manufactured in India at the rates specified in the First Schedule to the Central Excise Tariff Act, 1985 (6 of 1986). This sub-section also excludes goods produced or manufactured in special economic zones. Thus goods produced or manufactured in special economic zone are not liable to excise duty under Section 3 of the Central Excise Act. 7.4.1 Clause (b) of Section 3(1) provides for special duty of excise, in addition to Cenvat, on excisable goods specified in the second schedule to the Central Excise Tariff Act, 1985. This clause is again applicable to whole of the country other than special economic zone. 7.4.2 Proviso to Section 3(1) state that duties of excise which shall be levied and collected on any excisable goods which are produced or manufactured by a hundred per cent export-oriented undertakings and brought to any other place in India shall be an amount equal to the aggregate of duties of customs which would be leviable under the Customs Act, 1962 or any other law for the time being in force, on like goods produced or manufactured outside India if imported into India and when the said du....
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.... Tariff Act. In respect of certain goods, other duties of excise such as Additional Duties of Central Excise (Textiles & Textile Articles) Act, 1978 or cesses are also chargeable. For computation of CVD, they are also taken into account; and (c) Education Cess. Here, we note that component (b) is nothing but duties of Central Excise which are leviable on like goods produced or manufactured in India. Thus the excise duty which is equal to aggregate of Customs duties in respect of 100% EOU would be more than the excise duty leviable on like goods produced by other manufacturing unit located in the country. The reason is that 100% EOU gets lot of advantage relating to duty-free import or duty-free local procurement of raw materials, consumables, capital goods as also under Income Tax Laws compared to other units located in the country. Moreover, 100% EOU are expected to mainly export. We also note that Explanation 1 to the proviso to Section 3(1) of the said Act specifically provides that in respect of goods where different rates are prescribed, in respect of any duty of customs, highest would be taken. Thus if basic customs duty or CVD are prescribed at different rates, highest....
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.... paid on inputs used in the manufacture of goods or other conditions. As noted in para 7 above excise duty scheme in respect of DTA units and clearance from 100% EOU to DTA are entirely different. The exemption notifications generally relate to DTA unit. It is in this context that proviso to Section 5A(1) specifically provides that unless specifically provided in an exemption notification, no exemption therein shall apply to excisable goods produced or manufactured by a 100% EOU and brought to any place of India. 10. From the above provisions, following emerges (a) Goods produced or manufactured in a 100% EOU and cleared to any place in India are chargeable to excise duty. (b) The said excise duty applicable to 100% EOU is different than applicable to other manufacturing units (who are required to pay duty as specified in First and Second Schedule to the Central Excise Tariff Act, 1985) (c) The said excise duty applicable to 100% EOU is an amount equal to the aggregate of the duties of customs which would be leviable under the Customs Act, 1962 (52 of 1962) or any other law for the time being i....
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....to as the Central Excise Tariff Act), specified in the corresponding entry in column (2) of the said Table, produced or manufactured in an export oriented undertaking or an Electronic Hardware Technology Park (EHTP) Unit or a Software Technology Park (STP) Unit and brought to any other place in India in accordance with the provisions of Export and Import Policy and subject to the relevant conditions specified in the Annexure to this Notification, and referred to in the corresponding entry in column (5) of the said Table, from so much of the duty of excise leviable thereon under section 3 of the Central Excise Act as specified in the corresponding entry in column (4) of the said Table. TABLE Sr. No. Chapter or heading No. or sub-heading No. Description of Goods Amount of Duty Condi-tions (1) (2) (3) (4) (5) 2. Any Chapter All goods In excess of the amount equal to fifty per cent. of the duty leviable under Section 3 of the Central Excise Act : Provided that the duty payable in accordance with this Notification in respect of the said goods shall not be less than the duty of excise 2 leviable on the li....
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....to 30% of the duty payable under section 3 of the Central Excise Act, 1944. Illustration.- Assuming, product X has the value of Rs. 100 under section 14 of the Customs Act, 1962 and is chargeable to basic custom duty of 25% ad valorem, special additional duty of 4% ad valorem and not chargeable to additional duty. The computation of duty required to be paid would be as follows : Basic Customs duty = Rs. 25/- Value for the purpose of special additional duty if leviable = Rs. 100/- + Rs. 25/- = Rs. 125/- Special Additional duty if leviable = 4% of Rs. 125/- = Rs. 5.0/- Total duty payable but for this exemption = Rs. 25/- + Rs. 5.00/- = Rs. 30.00/- Thirty per cent. of the aggregates of the duties of customs = 30% of Rs. 30.00/- = 9.00/- Duty required to be paid in accordance with this Notification = Rs. 9.00/- 4 No. Conditions 2. If,- (i) the goods are cleared into Domestic Tariff Area in accordance with sub-paragraphs (a), (b), (d) and (h) of Paragraph 6.8 of the Export and Import Policy; (ii) exemption shall not be availed until Deputy Commissioner of Customs or Assistant Commissioner of Cu....
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....or manufactured in India; (ii) such finished goods are cleared into Domestic Tariff Area in accordance with sub-paragraphs (a), (b), (d) and (h) of Paragraph 6.8 of the Export and Import Policy; and (iii) the goods, if manufactured and cleared by the unit other than export oriented undertaking are wholly exempt from duties of Excise or are chargeable to "NIL" rate of duty. 11.2 A reading of opening para clearly specifies that the notification is issued under Section 5A of the said Act and is applicable to the excisable goods produced or manufactured in an export oriented undertaking and brought to any other place in India. Thus the notification will be applicable to the appellant's unit. In fact, this aspect is not under dispute. However, dispute is relating to the Sr. No. under which final products are being cleared and conditions relating to such Sr. No. This aspect will be discussed latter in this order. 11.3 Now, we come to the applicability of Notification Nos. 29/2004-C.E. and 30/2004-C.E. In most of the situation under dispute, appellants are claiming rate of duty as per Notification No. 30/2004-C.E. while revenue wants to levy duty ....
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....ling within the chapter, heading No. or sub-heading No. of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the Central Excise Tariff Act), specified in the corresponding entry in column (2) of the said Table, from whole of the duty of excise leviable thereon under the said Central Excise Act : Provided that nothing contained in this notification shall apply to the goods in respect of which credit of duty on inputs or capital goods has been taken under the provisions of the Cenvat Credit Rules, 2002. - TABLE S. No. Chapter or heading No. or sub-heading No. Description of goods (1) (2) (3) 3 52.04, 5205.11, 5205.19, 5206.11, 5206.12, 52.07, 52.08, 52.09 All goods 8 55.05 All goods, except such goods which arises during the course of manufacture of filament yarns, monofilaments, filament tows or staple fibres or manufacture of textured yarn (including draw twisted and draw wound yarn) of heading Nos. 54.02, 54.03, 55.01, 55.02, 55.03 or 55.04. Explanation - For the purposes of this exemption, 'manufacture of filament yarn, monofilaments, filament tows or staple fibres" means manufacture of f....
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....... Explanation. - In this sub-section, the expression "the excise duty for the time being leviable on a like article if produced or manufactured in India" means the excise duty for the time being in force which would be leviable on a like article if produced or manufactured in India or, if a like article is not so produced or manufactured, which would be leviable on the class or description of articles to which the imported article belongs, and where such duty is leviable at different rates, the highest duty." Thus, in order to determine Additional duty of Customs, we have to ascertain the Excise duty leviable on the goods. This is of course excise duty payable on the goods by a normal unit i.e. other than 100% EOU. Further as per Explanation to the said sub-section also states that where such duty is leviable at different rate, the highest duty is to be taken. 11.7 In order to determine the excise duty, two notifications are relevant in the present dispute viz. Notification Nos. 29/2004-C.E. and 30/2004-C.E. While appellant is claiming the goods to be covered by Notification No. 30/2004-C.E., Revenue is claiming that applicable Notification is 29/2004. There is no d....
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....ded Additional duties of Excise leviable under Additional Duties of Excise (Textiles & Textile Articles) Act, 1978 denying benefit of Notification No. 31/2004-C.E. This notification reads as under :- "Textiles and Textile Articles - Exemption from additional duty under Additional Duties of Excise (Textiles and Textile Articles) Act - Notification No. 53/90-C.E. superseded In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944) read with sub-section (3) of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 53/1990-Central Excise, dated the 20th March 1990, published in the Gazette of India vide number G.S.R. 195(E), dated the 20th March 1990, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all goods falling within the Schedule to the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 from whole of the duty of excise leviable thereon under the said Act." A basic reading of the notif....
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....3 or 4, two conditions are to be determined viz. (1) whether the goods are produced or manufactured wholly from the raw materials produced or manufactured in India, and (2) whether the goods are chargeable to NIL rate or some other rate. In case of NIL rate, Sr. No. 4 would be applicable, otherwise Sr. No. 3 would be applicable. 14. In the present case, for the units (other than 100% EOU), two options are available viz. pay 8/4% excise duty (without any condition) or NIL rate of excise duty provided no Cenvat credit is taken on the inputs or capital goods used in the manufacturing process. Appellant has contended that they have not availed Cenvat credit on inputs, hence NIL rate will be applicable to them. Both the Notification Nos. 29/2004-C.E. and 30/2004-C.E., as held by us earlier are inapplicable for 100% EOU in view of proviso to Section 5A(1) of the Central Excise Act and therefore availment or non-availment of Cenvat Credit by 100% EOU is irrelevant. In any case unlike normal unit, 100% EOU can get inputs duty-free and therefore not avail the Cenvat credit or get duty-paid inputs and avail Cenvat credit. Normal DTA units have no such option. They have to get duty-pa....
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....ous raw material. Revenue has also argued that appellant has used same machinery and they do not have separate line for goods to be exported and that cleared to domestic buyers. There is no such requirement under the law that machinery has to be separate for export and domestic clearance and claim cannot be rejected on this ground. Similarly, appellant's argument that exported goods were of better quality made from better quality raw materials is without any supporting evidence in terms of technical characteristics and is therefore rejected. If appellant can prove from records of inputs such as lot register, etc. and produce records of the corresponding final products with the clearance documents that DTA clearances are only from raw materials produced or manufactured in India, then such goods will be eligible to be cleared at the rate applicable vide Sr. No. 3 otherwise these are leviable to duty as per Sr. No. 2 of the Notification. It is settled principle of taxation, if appellant wants benefit of lower rate than he has to fully satisfy the conditions attached to the lower rate. 16.1 We find that appellant in the appeals has produced certain invoices to prove that they h....