TaxTMI 
TaxTMI 
TaxTMI 
2007 (4) TMI 6
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....the Joint Commissioner of Central Excise, Mumbai to the appellant stating that the appellant was not paying appropriate duties on the goods cleared as per the permission granted by the Development Commissioner. According to the show cause notice, the appellant had paid Countervailing Duty (CVD) @ 30% on Texturised Polyester Yarn plus Rs.9 per kg. on Dyed Polyester Yarn cleared under para 9.10(b) of Exim Policy against foreign exchange. According to the show cause notice, under the proviso to sub-section (1) of Section 3 of the Central Excise Act, 1944, (the "1944 Act") duty of excise was leviable on excisable goods produced by 100% EOU and allowed to be sold in India, equal to the aggregate of the duties of customs leviable under Section 12 of the Customs Act, 1962, on like goods produced or manufactured outside India if imported into India, and where the said duty of customs is chargeable by reference to value; the value of such goods shall be determined in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975. According to the said show cause notice, in the present matter, on clearance of the said yarns into DTA under pan 9.10(b), appellant bein....
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....e pan 7 applied only to goods (raw materials) which were imported for the manufacture of articles al towed to be sold in India on payment of duty under Section 3(1) of the said 1944 Act. According to the Tribunal, para 7 applied only to DTA sales falling under para 9.9 and it did not apply to DTA sales (supplies) falling under para 9.10(b) and if they are equated still the appellant was not entitled to the benefit, in full, of the exemption Notification no. 2/95-CE. According to the Tribunal, the appellant was also not entitled to the benefit of exemption under Notification No. 2/95-CE because that notification was applicable to goods allowed to be sold in India in accordance with the provisions of para 9.9 of Exim Policy 1997-2002. According to the Tribunal, notification bearing no. 2/95-CE had the effect of fixing a value or the amount of which 50% of the duty leviable under Section 12 of the Customs Act, 1962 stood payable. But Section 12 of the Customs Act, 1962 only applied to goods sold to domestic tariff at the rate of duty leviable on like goods when imported into India. According to the Tribunal, in terms of Notification No. 2/95-CE the rate of duty applicable was 50% of t....
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....leviable under the said section 12 at the highest of those rates. Explanation 2. - In this proviso, - (1) "free trade zone" means the Kandla Free Trade Zone and the Santa Cruz Electronics Export Processing Zone and includes any other free trade zone which the Central Government may, by notification in the Official Gazette, specify in this behalf; (ii) "hundred per cent export-oriented undertaking" means an undertaking which has been approved as a hundred per cent export-oriented under taking by the Board appointed in this behalf by the Central Government in exercise of the powers conferred by section 14 of the Industries (Development and Regulation) Act, 1951 (65 of 1951), and the rules made under that 6. We also quote hereinbelow the exemption Notification No. 2 /95-CE : "GENERAL EXEMPTION NO.55 Exemption to all excisable goods produced in 100% EOU, FTZ, EHTP or STP units when sold in India. - In exercise of the powers conferred by sub section (1) of section 5A of the Central Excise and Salt Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all excisable goods (hereinafter referred to as th....
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....ue of such goods being cleared for home consumption from the unit specified in column (2) of the Table hereto annexed, does not exceed the percentage limit of the entitlement as specified in the corresponding entry in column (3) of the said Table for such clearance, calculated with reference to the total value of production of goods which are identical in all respects to those under clearance; (c) The balance of the production of the goods which is identical to such goods under clearance of home consumption, is exported out of India or disposed of in terms of paragraph 9.10 of the said Export and Import Policy, (ii) In the case of the said goods being software cleared for home consumption (a) the value of such software cleared during the period specified does not exceed twenty-five per cent of the total value of production of the software in the unit; (b) the balance of the production excluding the value cleared as referred to in sub-clause (a) is exported out of India or disposed of in terms of para 9.10 of the said Export and Import Policy, (iii) in the case of the said goods in the nature of rejects, scrap, waste or remnant being cleared for home consumption, the value....
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.... components manufactured in the unit. 3. Other Units 25 per cent" (emphasis supplied) 7. For the following reasons, we find merit in this civil appeal. Firstly, on examination of the Exim Policy we find that the said Policy as a rule stated that every 100% EOU was obliged to manufacture or produce from duty free imported raw materials capital goods etc., finished products/articles and as a rule every 100% EOU was obliged to export its entire production and earn foreign exchange. This was what was called as Physical Exports. However, this rule had certain exceptions. In this civil appeal, we are concerned with DTA sales. As an exception, there existed two types of DTA sales under the said Policy, namely. DTA sales against rupee and OTA sales against foreign exchange which was similar to physical exports. This latter category was known as "Other Supplies in DTA". Therefore, to put it in brief, "Other Supplies in DTA" was equated with physical exports which, as stated above, was the general rule for 100% EOU. In other words, the general rule was physical exports and other supplies in DTA was equated to physical exports. This equation was necessary because other supplies in DTA ga....
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....notification No. 2/95-CE will have to be decided afresh by the adjudicating authority and accordingly, we hereby remand the matter back to the Commissioner for calculating the duties payable by the assessee in terms of Notification No. 2/95. The Commissioner will calculate the duties accordingly as hereinabove mentioned. Lastly, we are of the view that there is no fundamental difference, as far as the exemption notification No. 2/95-CE is concerned, between DTA sales against foreign exchange and DTA sales against rupee. Once DTA sales against foreign exchange fall within the expression "allowed to be sold in India", the Department cannot deny to such sales the exemption under Notification no. 2/95-CE, since DTA sales against foreign exchange will come under para 9.9. According to the Tribunal, the entire supply to PTA against foreign exchange was not entitled to the benefit of Notification No. 2/95-CE but only 50% of the supply was eligible for the said relief. We do not see any basis for introduction of this condition in Notification No. 2/95-CE. It appears that this condition is brought in on the ground that para 9.9(b) refers to DTA sales up to 50% of the FOB value of exports. I....