TaxTMI 
TaxTMI 
2018 (6) TMI 908
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....under Section 5A of Central Excise Act, 1944. Department was of the view that appellants cannot avail the concessional duty as under Notification 29/2004 and are liable to pay @ 8% as per tariff rate against CTH 63026000 of Central Excise Tariff Act, 1985. Show Cause Notices were issued which after adjudication confirmed the demand, interest and penalties. In appeal, the Commissioner (Appeals) set aside the same. Hence these appeals by department. 2. The Ld.AR, Sh.R.Subramanian reiterated the grounds of appeal. The notification 29/2004 does not state specifically mention that it is applicable to EOU and therefore as per Section 5A, of Central Excise Act, 1944, the concessional rate of duty of the said notification is not applicable to EOU. The respondents are therefore liable to pay the merit duty. 3. On behalf of respondent, Ld.Counsel Ms.Naveena Durairaj submitted that the issue stands settled by various decisions. She argued that respondents have cleared the goods to DTA by following the notification 23/2003-CE (Sl.No.2). Thus while calculating the aggregate of duties, respondents have taken the effective rate of duty which is 4% as under notification 29/2004 dt.9.7.2004. The ....
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.... unit, which is specified in the said Schedule read with the any other relevant notification issued under subsection (1) of section 5A of the Central Excise Act : [* * * *] 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, additional duty of 16% ad valorem and special additional duty of 4% ad valorem. The computation of duty required to be paid would be as follows : Basic Customs duty = Rs.25/- Value for the purpose of calculation of additional duty = Rs. 100/- + Rs. 25/- = Rs.125/- Additional duty = 16% of Rs.125/- = Rs. 20/- Value for the purpose of special additional duty if leviable = Rs. 100/- + Rs. 25/- + Rs. 20/- = Rs. 145/- Special additional duty if leviable = 4% of Rs. 145/- = Rs. 5.8/- Total duty payable but for this exemption = Rs. 25/- + Rs. 20/- + Rs. 5.80/- = Rs. 50.80/- 50% of aggregates of the duties of customs =50% of Rs. 50.80/- = 25.40 Duty required to be paid in accordance with this notification is Rs. 25.40/- provided it is not less than the duty of excise leviable on like goods produced or manufactured outside the oriented undertaking etc. ....
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....may be applicable. The objection raised by the Revenue is that the benefit of this Notification will not be applicable in view of the proviso to Section 5A(1) of the Central Excise Act, which is reproduced above. We find that there has been total misappreciation of this provision of law. Section 5A(1) only grants power to exempt excise duty leviable under Section 3(1) of the Central Excise Act. The proviso to Section 5A(1) is only to state that even if there is exemption from Central Excise duty under Section 3(1) on any goods produced in India, it will not imply that the exemption from Central Excise duty will also be automatically available on goods produced and cleared by a 100% EOU. It is quite obvious from this proviso that, by virtue of exemption under Section 5A(1), goods produced by a 100% EOU do not get automatically exempted. This is so because the duty payable by a 100% EOU is equal to the aggregate of Customs duties. In other words, even if excise duty is Nil on a product, the excise duty on a product manufactured by 100% EOU will not be Nil. Such product will still have to bear basic customs duty and cess, etc. on such customs duty. The duty payable on goods produced a....
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.... in force, on like goods produced or manufactured outside India, if imported into the country. In other words, the duty payable shall be determined in exactly the same manner as is done in respect of imported goods. This implies that for determining the duties of excise under proviso to section 3(1) of the Central Excise Act, 1944 on the goods cleared to the DTA by the EOUs, the exemption under the relevant Customs Notifications and Excise Notifications, if any, have to be provided. Therefore, I am of the view that the assessee is liable to pay only the effective rate of Additional Duty of Customs under section 3(1) of the Customs Tariff Act on clearances of the goods into the DTA. This view is supported by the ratio of the decisions referred and relied briefly dealt as under. (a) U.O.I. v. Plastic Processors [2005 (186) E.L.T. A27 (S.C.)]. The Apex Court maintained the decision of the Delhi High Court that CVD was payable at effective rates and not at tariff rate on clearances by a 100% EOU into the DTA. The Delhi High Court [2002 (143) E.L.T. 521 (Del.)] had disposed of certain writ petitions challenging the legality of Circular No. 38/2000-Cus. dated 10th May, 2000 issued by th....