2003 (12) TMI 405 - AT - Central Excise

Summary

Issues:
Calculation of duty under Notification 2/95 for goods cleared by 100% export-oriented unit to the domestic tariff area.

Analysis:
The appeal concerned the correct method of calculating the duty under Notification 2/95 for goods cleared by a 100% export-oriented unit to the domestic tariff area in the years 2000 and 2001. The notification exempted goods from excise duty in excess of 50% of the customs duty leviable under the Customs Act, 1962. The Commissioner applied a method of calculation from Circular No. 7/01, while the appellant argued for a different method based on a Tribunal decision in Futura Polymers v. CCE. Another Tribunal decision in Uniworth Textiles Ltd. was also cited, taking a contrary view. Futura Polymers outlined two methods of calculation, with the appellant advocating one method and the Revenue another.

The first method proposed by the appellant involved calculating the duty by assuming the goods were imported into India and finding the rates of customs duties, then paying 50% of those rates as excise duty on the cleared goods. The second method, favored by the Revenue, involved a different calculation based on a circular from 2001. The dispute centered on the calculation of the value for the purpose of assessment of additional customs duties, with conflicting examples leading to uncertainty. The value determination under Section 14 of the Customs Act played a crucial role in the calculation.

The conflicting positions taken in Futura Polymers and Uniworth Textiles regarding the appropriate method of calculation led the Tribunal to decide to refer the matter to a Larger Bench for resolution. The discrepancy in arriving at the value for additional customs duties based on different interpretations of the Customs Tariff Act necessitated a more comprehensive review by a Larger Bench. The case was to be presented before the President for the constitution of a Larger Bench to address the conflicting interpretations and provide clarity on the correct method of duty calculation under Notification 2/95 for goods cleared by 100% export-oriented units to the domestic tariff area.