2002 (7) TMI 663 - AT - Central Excise

Issues Involved:
1. Whether Additional Excise Duty (AED) under the Textile & Textile Articles Act, 1978 (T&TA) is recoverable on cotton yarn and polyester/cotton yarn manufactured and cleared by a 100% Export Oriented Unit (EOU) in the Domestic Tariff Area (DTA).
2. Applicability of Notification No. 55/91-C.E. granting exemption from AED.
3. Impact of amendment in Notification No. 8/97-C.E. by Notification No. 11/2000-C.E.
4. Validity of the Board's Circulars regarding the exemptions.

Detailed Analysis:

1. Whether Additional Excise Duty (AED) under the Textile & Textile Articles Act, 1978 (T&TA) is recoverable on cotton yarn and polyester/cotton yarn manufactured and cleared by a 100% Export Oriented Unit (EOU) in the Domestic Tariff Area (DTA):
The core issue revolves around the recovery of AED on goods manufactured by a 100% EOU and cleared in the DTA. The appellants, a 100% EOU, argued that they are exempt from AED under Notification No. 55/91-C.E. However, the Tribunal noted that after the amendment of Notification No. 8/97-C.E. by Notification No. 11/2000-C.E., the appellants were liable to pay AED on goods cleared in the DTA. The Tribunal upheld the Commissioner's order confirming the duty demand of Rs. 44,36,547/- and a penalty of Rs. 5 lakhs.

2. Applicability of Notification No. 55/91-C.E. granting exemption from AED:
The appellants contended that Notification No. 55/91-C.E., which exempts all excisable goods produced or manufactured in a 100% EOU from AED, was still applicable. They argued that this notification had not been rescinded or amended and thus, they were entitled to its benefits. However, the Tribunal found that the benefit of Notification No. 55/91-C.E. could not be claimed after the amendment of Notification No. 8/97-C.E. by Notification No. 11/2000-C.E. The Tribunal emphasized that the insertion of the words "any other law for the time being in force" in Notification No. 8/97-C.E. brought parity in the excise duties payable by 100% EOUs and domestic manufacturers.

3. Impact of amendment in Notification No. 8/97-C.E. by Notification No. 11/2000-C.E.:
The amendment in Notification No. 8/97-C.E. by Notification No. 11/2000-C.E. was pivotal. The amendment substituted the words "as is in excess of an amount equal to the duty of excise leviable under the said Section 3 of the Central Excise Act" with "as is in excess of an amount equal to the aggregate of the duties of excise leviable under the said Section 3 of the Central Excise Act or under any other law for the time being in force." This change meant that 100% EOUs were now liable to pay the aggregate of duties of excise, including AED, on goods cleared in the DTA. The Tribunal noted that this amendment was significant and effectively nullified the applicability of Notification No. 55/91-C.E. for clearances made in the DTA.

4. Validity of the Board's Circulars regarding the exemptions:
The appellants relied on the Board's Circular No. 384/17/98-CX., dated 20-3-1998, which allowed the simultaneous benefit of Notification No. 55/91-C.E. and Notification No. 8/97-C.E. However, the Tribunal noted that this circular was issued before the amendment of Notification No. 8/97-C.E. The Tribunal also referred to the subsequent Board's Circular No. 554/50/2000-CX., dated 19-10-2000, which clarified that after the amendment of Notification No. 8/97-C.E., the benefit of Notification No. 55/91-C.E. could not be claimed by 100% EOUs for goods sold in the DTA. The Tribunal found that the subsequent circular was valid and applicable.

Conclusion:
The Tribunal upheld the Commissioner's order confirming the duty demand and penalty, concluding that the appellants were liable to pay AED on goods cleared in the DTA after the amendment of Notification No. 8/97-C.E. by Notification No. 11/2000-C.E. The appeal was dismissed, and the Tribunal emphasized that the amendment brought parity in the excise duties payable by 100% EOUs and domestic manufacturers, nullifying the applicability of Notification No. 55/91-C.E. for clearances made in the DTA.

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