2005 (2) TMI 564 - AT - Central Excise

Summary

Issues:
1. Whether the benefit of Notification No. 125/84-C.E. is available to goods manufactured by a 100% Export Oriented Undertaking and cleared to Bhutan.

Analysis:
The appeal involved a dispute regarding the applicability of Notification No. 125/84-C.E. to goods manufactured by M/s. B.E.C. Foods, a 100% Export Oriented Undertaking, and cleared to Bhutan. The appellant contended that as per the notification, goods produced by a 100% EOU are exempt from Central Excise duty if not meant for home consumption in India. The appellant argued that the requirement of payment in freely convertible currency, as stipulated in Notification No. 150/81, does not apply to goods cleared to Bhutan due to its status as an independent sovereign state. The appellant also highlighted that the circular issued by the Board cannot override the legislative provision of the exemption notification.

The Departmental Representative countered by emphasizing that export under bond without payment of duty is subject to conditions, including receiving payment in freely convertible currency. It was argued that since the appellant did not receive payment in freely convertible currency for exports to Bhutan, the duty liability arises. The representative referred to Circular No. 48/95, which clarified the duty implications for exports to Nepal and Bhutan when payment is received in Indian currency.

Upon considering the arguments, the Tribunal noted that 100% Export Oriented Undertakings are permitted to sell a specified percentage of their production in the Domestic Tariff Area on payment of duty. However, the Tribunal observed that Notification No. 125/84-C.E. exempts goods produced by a 100% EOU from Central Excise duty if not sold in India. The Tribunal concluded that since the goods were not sold in India but exported to Bhutan, the duty exemption under the notification applies. The Tribunal held that the circular issued by the executive cannot create a duty liability against the appellant, ultimately setting aside the impugned order and allowing the appeal.

In conclusion, the judgment clarified the applicability of Notification No. 125/84-C.E. to goods manufactured by a 100% EOU and cleared to Bhutan, emphasizing that the duty exemption applies as long as the goods are not sold in India. The Tribunal highlighted the legislative provision's significance over administrative circulars in determining duty liabilities, ultimately ruling in favor of the appellant based on the exemption notification's clear provisions.