2003 (10) TMI 437 - AT - Customs

Summary

Issues:
Whether additional duty of Customs is payable by a unit in a Special Economic Zone for goods cleared in the Domestic Tariff Area, despite exemption from Duty of Excise under a Notification for domestic goods.

Analysis:
The appeal filed by M/s. Vazir Polymers Ltd. questioned the liability of paying additional duty of Customs as a unit in Kandla Special Economic Zone for goods cleared in the Domestic Tariff Area, especially when Duty of Excise is exempted for domestic goods under a Notification. The Appellant argued that since their goods were exempted from Central Excise duty under Notification No. 3/2001, the countervailing duty on such goods should not apply. They contended that the Additional Customs duty should be equivalent to the Excise duty payable on similar goods manufactured in India, which in this case would be nil. However, the Departmental Representative argued that the benefit of the Notification was not applicable to a unit in a Special Economic Zone based on an amendment in Notification No. 3/2001. The Appellant relied on precedents like Ratnagiri Textiles Ltd. v. CCE, Jaipur II and Lucky Star International v. Union of India to support their argument.

The Tribunal considered the arguments from both sides. While the Appellants' claim seemed valid based on the nil rate of duty for reprocessed plastic material under the specified Chapters of the Tariff, including Chapter 39, the Tribunal noted that the Explanation inserted in Notification No. 3/2001 specifically excluded plastic material reprocessed in a Special Economic Zone from the exemption. Therefore, the Tribunal concluded that the benefit of the Notification could not be extended to the Appellants as they operated in Kandla Special Economic Zone. The Tribunal distinguished the decision in Lucky Star International as it was made prior to the relevant amendment in the Notification. Similarly, the decision in Ratnagiri Textile Ltd. was deemed inapplicable due to the absence of a specific Notification reference. Consequently, the Tribunal found no merit in the Appeal and rejected it.

In summary, the judgment clarified that despite the exemption from Central Excise duty for reprocessed plastic material under a Notification, the Additional Customs duty was still applicable to a unit in a Special Economic Zone like Kandla for goods cleared in the Domestic Tariff Area. The Tribunal's decision was based on the specific exclusion of Special Economic Zones in the relevant Notification, rendering the benefit inapplicable to the Appellants in this case.