2004 (4) TMI 481 - AT - Central Excise

Summary

Issues involved:
1. Computation of duty in terms of Notification No. 2/95-C.E., dated 4-1-95 for a 100% Export Oriented Undertaking (EOU) manufacturing halogen bulbs permitted to clear into Domestic Tariff Area (DTA).

Analysis:
The appeal in question pertains to the computation of duty under Notification No. 2/95-C.E. for a 100% EOU manufacturing halogen bulbs. The Appellant argued that the duty demand was incorrect as they followed the method laid down by the Board in Circular dated 18-5-94, which was applicable during the period in question. They contended that the subsequent Circular dated 6-2-2001 cannot have a retrospective effect and that the duty calculation method should align with the Circular from 1994. Reference was made to a relevant decision in the case of Futura Polymers Ltd. v. CCE, Chennai, 2003. On the other hand, the Respondent argued that post-amendment of Notification No. 2/95-C.E., a new Circular dated 24-9-99 illustrated the computation method that should be followed.

Upon considering the arguments, the Tribunal analyzed the Notification No. 2/95-C.E. and its subsequent amendments. The Tribunal noted that the exemption was available up to 50% of each duty of customs, emphasizing the use of the word "each" before duties of customs in the Notification. The Tribunal highlighted that the Circular from 1994 clarified the method of calculation based on the specific wording of the Notification, which was not aligned with the method followed by the Revenue. Additionally, the Tribunal pointed out that the Circular dated 6-2-2001 referred to Section 3(1) of the Central Excise Act, which was not in line with the terms of the Notification at the relevant time. The Tribunal also referenced the decision in the case of Futura Polymers Ltd., emphasizing the inconsistency between the Circular and the Notification, which was later rectified by an amendment in 2002.

Further, the Tribunal observed that the amendment in 1999 did not alter the method of duty calculation, and the subsequent Circular did not introduce any changes in the calculation method. The Tribunal concluded that the method of duty calculation adopted by the Revenue was incorrect and allowed the appeal filed by the Appellants, ruling in favor of M/s. Autolite (India) Ltd. The judgment highlighted the importance of aligning the duty calculation method with the specific wording of the Notification and relevant legal provisions, emphasizing the need for consistency in interpreting notifications and circulars.