AI Drafter 
TaxTMI 
TaxTMI 
2023 (10) TMI 1297
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....ayment of duty in terms of Notification No.4/2006-CE dated 01.03.2006 as amended. 2.1 The Revenue is of the view that the said Notifications were issued under Section 5A (1) of the Central Excise Act, 1944. The proviso to the said Section provides that under exemption of Section 5A shall not apply to excisable goods, which are produced or manufactured by a 100% EOU and brought to any place in India. Therefore, the appellant is not eligible for those exemption Notifications. 2.2 The proceedings were initiated against the appellants by issuing show-cause notices to demand differential duty along with interest and to impose penalties on the appellants. 2.3 Against the said order, the appellants are before us. 3. The ld.Counsel for the appellants submits that the duty payable by 100% EOU is covered by the provisions of Section 3(1)(b)(ii) of the Central Excise Act, 1944. In view of the said provisions, duty is to be levied and collected from a 100% EOU would the duty of Customs payable as if the goods produced or manufactured outside India have been imported into India. This is the basic charging section of duty leviable on a 100% EOU when clearing the goods to DTA. The Not....
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....rictions under proviso to Section 5A and the unit will be liable to pay duty based on applicable Customs duty and additional Customs duty in terms of Notification vide Sl.No.32 of Notification No.4/2006 on Sulphuric Acid subject to the condition No.2 of the Annexure to the said Notification. There is no allegation in this case regarding involvement to Condition No.2. Therefore, the question of denying benefit of exemption does not arise. 3.4 He further submits that a letter was issued by the appellants' sister unit seeking a guidelines mentioned in para 4 of the letter 02.04.2008 issued by the Chief Commissioner of Central Excise, Bombay. In response to the said letter, the Superintendent of Central Excise, Kalyan, has intimated to follow the proper CT-2 Procedure. 3.5 He also refers a Circular No.4/2008-09 dated 22.04.2008 clarifying the position and in the said Circular, it has been made clear that the Notification No.2/2008-CE dated 01.03.2008 would be applicable while making clearance of the goods from EOU to DTA and the nil rate of duty would be applicable in case of clearance of Spent Sulphuric Acid to fertilizer companies. 3.6 It is also submitted that the adjudicat....
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....lowing aspects are being noted :- (a) The proviso to Section 5A of 'Act' cannot be taken as a bar in calculating 'CVD' for the purpose of computing the duties payable by a 100% EOU unit while making DTA clearances, stands settled by the judgment of the Delhi High Court in the case of Plastic Processors v. Union of India - 2002 (143) E.L.T. 521 (Del.) which has expressly been upheld by the Hon'ble Supreme Court in Union of India & Others v. Plastic Processors & Others - (2009) 12 SCC 747 = 2005 (186) E.L.T. A27 (S.C.). (b) Only the effective rate of duty applicable to the goods cleared by the domestic unit can be applied for computing the CVD payable. The respondent's impugned actions are contrary to the settled position of law on the issue by the Supreme Court in Hyderabad Industries Limited (supra) and Thermax Private Limited (supra), where the Hon'ble Supreme Court has observed that while calculating CVD it has to be assumed that the goods were manufactured in India and the applicable rate of duty to such manufactured goods has to be applied to the imported goods. The effective rate of excise duties for a unit located in the specified area mentioned in 50/2003-C....
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....in force as becomes applicable on the goods produced outside India and imported therefrom. It is such collection of aggregate duty of Customs leviable under the Customs Act, 1962 which would be considered appropriate for payment as excise duty by 100% 'EOU'. (iii) It is also evident from the impugned order dated 17-3-2011 of 'DGEP' that the duties of customs leviable on the goods imported into India are as under :- (a) Customs duty under Section 12 of the Customs Act, 1962 (b) Additional duty of customs under Section 3(1) of the Customs Tariff Act, 1975. (c) Special Additional Duty etc. The basic Customs duty under Section 12 of the Customs Act, 1962 have already been paid by the petitioners on effecting clearances to DTA and thereby discharging one of the their liabilities required for working out the aggregate duties of Customs under Section 3 of the 'Act'. The provisions of Section 3(1) of the Customs Tariff Act, 1975 requires that for determining the said duties of Customs, it has to be equal to the excise duty for the time being leviable on a like article if produced or manufactured in India. The expression "the excise duty....
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....he petitioners relied on the O.M. dated 7-1-2003. In the said O.M. it was declared by the Government of India to grant 100% excise duty exemption for a period of 10 years from the date of commencement of commercial production to the new industries and thereby also declaring state of Himachal Pradesh being the special category state including State of 'Uttranchal'. In view of such background of the said declaration, the respondents have also not denied that Notification No. 50/2003-C.E., dated 10-6-2003 has been issued to serve the basic objective of the new industrial policy for the State of Himachal Pradesh introduced by the Ministry of Commerce on 7-1-2003. The petitioners in support of their claim that 100% 'EOU' are included in New Industrial Policy of Ministry of Commerce, Government of India has also relied on the state industrial policy of Government of Himachal Pradesh and the Rules regarding grant of incentives, concessions and facilities to industrial units in Himachal Pradesh, 2004. Undisputedly, such policy of state and the Rules framed by the state in the year 2004 were in compliance of O.M. dated 7-1-2003. 24. For calculation of excise duty payable by a 100% ....
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....vernment of India towards the expression "specifically provided" does not carry any force as a 100% 'EOU' unit only discharges his liability for payment of Additional Duty of Customs under Section 3(1) of the Customs Tariff Act by considering effective rate of excise duty provided under the Central Excise exemption notification and by doing so it is only discharging his liability for payment of Customs duty. 27. The plea of the respondent/Union of India that excise exemption notification is not applicable for calculating the Additional Duty of Customs, otherwise cannot be sustained particularly when the clarification letters dated 18-1-2008, 6-4- 2009, 24-9-2010 and even order dated 17-3-2011 does not dispute that for calculating Additional Duty of Customs under Section 3(1) of the Customs Tariff Act, 1975, Central Excise exemption notification, unconditionally or conditionally, on satisfaction of the conditions can be considered for calculating Additional Duty of Customs. In the present case the petitioners undisputedly comply with all the conditions laid down in Area based exemption notification of Central Excise and therefore, where there is no bar in such notification ....
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.... ignored that by benefit granted under FTP, a 100% 'EOU'/the petitioner unit is accountable for the earning of net foreign exchange (NFE) for the country unlike other manufacturers. Moreover, the petitioners are paying basic Customs duty under Section 12 of the Customs Act, 1962, whereas, other manufacturers while functioning in the State of H.P. though are claiming benefits of area base exemption but are not paying such Customs duty. The Central Government has consciously and intentionally provided the tax incentive benefit including 100% excise duty exemption to the special category State of Himachal Pradesh, as such, any disparity with other manufacturer of India, located in different parts, shall not be created." 9. In view of the above decision, which is applicable to the facts of this case, the charging section for duty on DTA clearance is under the provisions of Section 3(1)(b)(ii) of the Central Excise Act, 1944 and as per the said provisions, the duty is to be levied and collected from a 100% EOU, would be the duty of Customs payable if the goods produced and manufactured outside India and the same have been imported into India. This is the basic charging section of dut....
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....duty in terms of Notification No.2/2008-CE dated 01.03.2008 and Notification No.04/2006-CE dated 01.03.2006. 14. In view of this, we do not find any merit in the impugned orders and the same are set aside. 15. In the result, both the appeals are allowed with consequential relief, if any. (Pronounced in the open Court on 16.10.2023) ============= Document 1 6.2.1 The point of dispute is whether a 100% EOU can avail of the benefit of reduced duty as provided in Notification No. 02/2008-CE dated 01/03/2008 as amended. On this issue, as contended by the assessee, I find it relevant to go into the details of Notification No. 23/2003-CE dated 31/03/2003, which states -- "In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944, the Central Government exempts excisable goods produced or manufactured in an Export Oriented Undertaking 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". Now, at Sl. No. 2 of the said Notification, it is specifically mentioned that in ....
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....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 Customs or Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be, is satisfied with the said goods including Software, Rejects, Scrap, Waste or Remnants; (a) being cleared in Domestic Tariff Area, other than scrap, waste or remnants are similar to the goods which are exported or expected to be exported from the units during specified period of such clearances in terms of Export and Import Policy; (b) the total value of such goods being cleared under sub-paragraphs (a), (b) (d) and (h) of Paragraph of the Export and Import Policy, into Domestic Tariff Area from the unit does not exceed 50% of the Free on Board value of exports made during the year (starting from 1 April of the year and ending with 31st March of next year) by the said unit; (c) the balance of the production of the goods which are similar to such goods under clearance into Domestic Tariff Area, is exported out of India or disposed of in Domestic Tariff Area in terms of ....
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....ct can sell any of these products into DTA, up to 90% of FOB value of export of the specific products, subject to the condition that total DTA sale does not exceed the overall entitlement of 50% of FOB value of exports for the unit, as stipulated above". In terms of the above provision, the assessee has been granted LOP for two categories of products - Linear Alkyl Benzene Sulphonic Acid (LABSA) and Spent Sulphuric Acid (By- product). The DTA sale of finished products is permissible in terms of Para 6.8 of the FTP 2009-2014. The Development Commissioner granted permission for DTA sale from time to time on the basis of the export obligation fulfilled by the assessee in various financial years. It is to be noted that the 100 % EOU scheme is licensed and administered by the Department of Foreign Trade through the Development Commissioner. The letter of permission as well as the permission for DTA sale, on the basis of export obligation. fulfilled by the EOU, is determined by the Development Commissioner. So, on perusal of records, it appears that manufacture and sale of goods in the DTA is not in question since it was as per the permission ....
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....A clearances. It is, thus, viewed that there is no bar under the proviso to Section 5A ibid for considering excise exemption while calculating the additional customs duty component payable by an EOU on DTA clearances. Hence, the unit would be liable to pay duties based on applicable basic custom duty and applicable additional customs (CVD) in terms of the exemption vide Sl. No. 32 of Notification No. 4/2006-CE dated 01.03.2006 on Sulphuric Acid subject to the condition 2 of the Annexure to this Notification. This was issued with approval of the Member (Cus & EP), CBEC. 6.3.2 Consequent to the above DGEP clarification, the assessee contended that proviso to Section 5A of the Central Excise Act, 1944 cannot be taken as a bar in calculating CVD making DTA clearances, stands settled by the judgment of the Delhi High Court in the case of Plastic Processors -Vs- Union of India reported in 2002(143) ELT 521 (Del.)] which has expressly been upheld by the Hon'ble Supreme Court of India as reported in Document 8 2005(186) ELT A 27(S.C.). This has been noted by the Hon'ble High Court of Himachal Pradesh in the case of S....