TaxTMI 
TaxTMI 
2023 (6) TMI 587
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....00% EOU is covered by Para 6.8 and 6.9 of Foreign Trade Policy 2009 - 2014 subject to fulfilment of certain obligations and also observance of Customs and Central Excise formalities including duty demand etc. The department was of the view that the said exemption Notification No. 10/1997 dated 1.3.1997 has been issued under sub-section (1) of Section 5A. There is nothing contained in the exemption notification making it applicable to 100% EOU and therefore the appellant is not eligible to claim the benefit of duty exemption as per the Notification. Though the appellant had informed the Range Officer about the transaction, they had not intimated the department regarding the fact of clearance without payment of duty and availing the exemption benefit under the said Notification. On the above facts, Show Cause Notice was issued to the appellant invoking the extended period proposing to demand the duty to the tune of Rs.62,81,173/- along with interest and for imposing penalty. After due process of law, the original authority confirmed the demand along with interest and imposed equal penalty. Aggrieved by such order, the appellant is now before the Tribunal. 2. The learned counsel Sh....
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....nd imposing equal penalty was passed. In the said order, it is also held that the equipment supplied by the appellant is essentially a radio communication receiver and thus goods are classifiable under CETH 85279990 on which basic customs duty is applicable at the rate of 5%. The duty liability was thus calculated. It is urged by the learned counsel that as there is no allegation raised in the Show Cause Notice with regard to the classification, the order passed by the adjudicating authority redetermining the classification is completely erroneous and cannot sustain. 7. With regard to the main allegation that the appellant is not eligible to avail the exemption as per Notification 10/1997-CE, the learned counsel adverted to Section 5A of Central Excise Act, 1944 which reads as under:- ".... That unless specifically provided in such notification, no exemption therein shall apply to excisable goods which are produced or manufactured - (i) In a free trade zone or a special economic zone and brought to any other place in India; or (ii) By a hundred per cent export-oriented undertaking and brought to any place in India ....... " 8. It is argued by learne....
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....re is no duty liability in the light of an exemption, then there can be no demand. 12. Thus, the CVD component has to be calculated on the basis of excise duty as payable on such products manufactured in India. If no duty is payable by way of exemption in terms of a notification, the said notification will apply for claiming exemption on CVD of goods produced cleared by an 100% EOU also. The appellant has therefore rightly availed the benefit of Notification 10/97 and therefore is not liable to pay any excise duty equal to CVD. 13. The adjudicating authority has held that the benefit of Notification 10/97 will not be applicable to appellant in view of proviso (1) of section 5A of Central Excise Act, 1944. The said view of the adjudicating authority is totally erroneous. The proviso to section 5A(1) of Central Excise Act merely states 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 benefit will be automatically extended to a 100% EOU. This is because the duty payable by an 100% EOU is equal to the aggregate of customs duties. Even if duty exemption is available on a product, the e....
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....dicating authority has travelled beyond the Show Cause Notice and hence the classification redetermined and adopted for raising the demand cannot sustain. Ordered accordingly. 20. The main issue is with regard to the demand of duty alleging that exemption Notification No. 10/1997 dated 1.3.1997 cannot be availed by the appellant. It is the case of the department that as per proviso to Section 5A, unless there is specific mention that the notification is applicable to 100% EOU, the benefit of duty exemption cannot be availed by 100% EOU. The relevant provision under sec. 5A has been already reproduced. The exemption under Central Excise Notification No.10/1997 reads as under:- "In exercise of the powers conferred by subsection (1) of section 5A of the Central Excise Act,1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods specified in column (3) of the Table below and falling under the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), from the whole of the duty of excise leviable thereon which is specified in the said Schedule, when supplied to the institutions specified in the cor....
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.... dated 1.3.2006 on Sulphuric Acid subject to the condition 2 of the Annexure to this notification." 22. It is clarified by the Board circular that wherein CVD is paid equal to excise duty as applicable, exemption of central excise notification shall also be applicable to EOU for computation of duty on DTA clearance. The circular clarifies that there is no bar under proviso to section 5A of Central Excise Act, 1944 to consider the exemption while calculating the additional customs duty payable b y an EOU on DTA clearance. 23. The issue whether a 100% EOU is eligible to avail the benefit of exemption notification is no longer res integra and is squarely covered by the decision of the Tribunal in the case of CCE, Hyderabad Vs. Shanta Biotechnics Ltd. reported in 2010 (259) ELT 447. The relevant para reads as under:- "7. The issue involved in this case is whether the duty payable by the assessee respondent shall be determined exactly in the same manner as is done in respect of imported goods, as the clearances effected by the assessee respondent is a 100% export oriented. The provisions of clearances made to DTA would apply to the current case, which is mandated under pr....
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....been done in India. Thus, in case of normal imports of reprocessed plastic materials, the importers/domestic manufacturers are liable to pay, among other duties, additional duty for customs (CVD). It, therefore, follows that no CVD exemption will be available when reprocessed plastic materials are cleared in Domestic Tariff Area (DTA) by EOUs and EPZ units. In other words, the plastic processor EOUs/EPZ units are liable to pay, among other duties, excise duty equivalent to CVD payable on imported reprocessed plastic materials (e.g. plastic granules/agglomerates) in respect of their DTA clearances of such materials/goods." The Delhi Court relied upon the decisions of the Supreme Court in Hyderabad Industries [1999 (108) E.L.T. 321 (S.C.)] and Thermax Private Limited [1992 (61) E.L.T. 352(S.C.)] and held as under : "8. As observed in the aforesaid quoted portions by the Apex Court, for the purpose of attracting additional duty under Section 3 of the Tariff Act, on the import of a manufactured or produced article, the actual manufacture or production of a like article in India is not necessary. Said provision specifically mandates that CVD will be equal to the excise....