2003 (3) TMI 383 - AT - Central Excise

Summary

Issues:
1. Levy of duty under Section 3 of the Central Excise Act, 1944 on goods manufactured by a 100% Export-Oriented Unit (EOU) and allowed to be sold in India.
2. Interpretation of the term "allowed to be sold in India" under the EXIM Policy.
3. Application of Notification No. 125/84-CX in determining the duty on goods supplied to India.
4. Consideration of Board Circular on levy of excise duty under Section 3 of the Central Excise Act, 1944.

Analysis:

1. Levy of Duty on Goods Manufactured by 100% EOU:
The Tribunal examined the scope of duty levy under Section 3 of the Central Excise Act, 1944, concerning goods produced by a 100% EOU. Referring to the case of Kuntal Granites Pvt. Ltd., it was noted that the levy is restricted for 100% EOUs. The Tribunal emphasized that clearances made under Para 9.10(b) of the EXIM Policy do not fall under the DTA sale quota of Para 9.9(b), indicating that such goods are not equated with goods allowed to be sold in India.

2. Interpretation of "Allowed to be Sold in India" under EXIM Policy:
The Tribunal analyzed the term "allowed to be sold in India" in light of the Supreme Court's decision in SIV Industries Ltd. v. CCE. It was highlighted that permission to debond and permission to sell in India are distinct, with different authorities overseeing each. The Tribunal concluded that the expression "allowed to be sold in India" applies only to sales up to 25% of production by 100% EOUs in DTA with the Development Commissioner's permission.

3. Application of Notification No. 125/84-CX:
The Tribunal emphasized that Notification No. 125/84 also uses the term "allowed to be sold in India," requiring a consistent interpretation as per the SIV Industries case. The Tribunal acknowledged the appellant's argument regarding the applicability of the notification and the need to consider the rates of nil duty for supplies made to India under Para 9.10(b) of the EXIM Policy.

4. Consideration of Board Circular and Duty Redetermination:
The Tribunal recognized the binding nature of Board Circulars on the levy of excise duty under Section 3, not covered by the term "allowed to be sold." It was determined that the duty under Notification No. 125/84-CX needed to be redetermined in line with the Circular. Consequently, the Tribunal set aside the order and remitted the matter back to the original authority for re-determination of duty and penalties, if applicable.

In conclusion, the Tribunal allowed the appeals as remand for the redetermination of duty as per Notification No. 125/84-CX and subsequent quantification of penalties, if necessary. The decision highlighted the importance of interpreting terms in line with legal precedents and Circulars for accurate levy and determination of excise duty on goods supplied by 100% EOUs.