2002 (7) TMI 372 - AT - Central Excise

Summary

Issues:
Rate of duty applicable to goods cleared from EOU without permission of Development Commissioner.

Analysis:
The dispute in the appeal concerns the duty rate for goods cleared from an EOU without Development Commissioner's permission between July 1999 and November 1999. Duty was imposed as per Section 3(1) proviso of the Central Excise Act. The appellant contests the duty demand based on the decision in Kuntal Granites case and Circular No. 618/9/2002-CX. Another relevant decision is the Treasure Tech. Electronics case. These decisions and the circular are based on the Supreme Court's ruling in SIV Industries case.

The appellant argues that according to the Bangalore Bench and the circular, duty for goods cleared to DTA without Development Commissioner's approval should be as per Section 3(1) of the Central Excise Act, similar to non-EOU manufacturers. The respondent contends that the SIV Industries case does not support this view, as it pertained to debonded EOUs and clearance of goods in stock, not goods sold to DTA without permission.

The Tribunal granted a stay considering the Kuntal Granites decision and the circular but expressed reservations about its correctness. It highlighted the different duty liabilities for DTA units and EOUs under Section 3 of the Central Excise Act. The Tribunal found the interpretation from Kuntal Granites creating an anomalous situation where EOUs would pay higher duty for permitted supplies to DTA but lower for excess sales, contrary to the Act's taxation scheme. The Tribunal doubted the alignment of Kuntal Granites with the SIV Industries judgment and directed the matter to be referred to a Larger Bench for clarification.