2018 (9) TMI 812

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....ared goods on payment of duty to the domestic tariff area in terms of Para. 6.8 (H) of the Foreign Trade Policy. The approval was granted by the Development Commissioner specifying that full duties shall be paid. The duty applicable payable by 100% EOUs for DTA clearances is Excise duty equal to corresponding customs duties applicable on similar goods imported into India. When similar goods are imported into India, they are, inter alia, subject to Special Additional Duty (SAD) under Section 3(5) of the Customs Tariff Act, 1975. The appellant herein had paid the excise duty calculating at the rate of full basic and additional Customs duty without adding of Special Additional Duty as they had claimed exemption available to 100% EOUs for clear....

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.... exemption in respect of SAD at the rate of 4% is irregular and a contravention of the conditions of permission granted by Development Commissioner. It was also proposed to recover this interest amount under Section 11AB and a penalty was proposed to imposed under Rule 25 of the Central Excise Rules, 2002 for the contraventions of Rules. The demands were confirmed by the Lower Authority and assessee's appeals were rejected by the First Appellate Authority vide the impugned Order-in-Appeal. 5. Aggrieved, by this Order-in-Appeal the assessee preferred this appeal on the following grounds. i) It is settled position in law that an 100% EOU has to pay duties as per Section 3 of the Central Excise Act, as are leviable during the time being in f....

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....of payment of all duties and do not envisage any exemption. Therefore, the clearances have to be on full payment of duties and there is no scope for permitting any exemption under any provision of a notification regardless of the nature of duty leviable. 8. We have carefully considered the arguments on both sides and the simple issue to be decided is whether a 100% EOU, who clears the goods to domestic tariff area on payment of VAT, are entitled to benefit of Notification No. 22/2006 -CE which exempts goods cleared to domestic tariff area from the SAD (on the condition that the goods were not exempted by State Government from payment of sales tax or VAT). We find this issue is no longer res integra, it has been decided in cases above, incl....

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....t the time of removal the Notification No. 20/2003-C.E., dated 31-3-2003 as amended by Notification No. 22/2006- C.E., dated 1-3-06 has to be applied clearance wise. (d) In the present case, the appellant is availing special exemption granted by the State of U.P. in respect of clearances made to DTA within U.P. only and are paying sales tax in respect of clearances made to some of the States. In other words, part of the clearances are not suffering sales tax while rest of the clearances are subject to sales tax/VAT. (e) In respect of clearances on which sales tax is exempted, SAD components should be included while determining duty in terms of the Notification No. 20/2003-C.E., dated 31-3-2003 as amended by Notification No. 22/2006-C.E.....