2006 (8) TMI 379 - AT - Central Excise

Summary

Issues:
1. Eligibility of goods removed without approval from a 100% EOU for exemption under Notification 125/84-C.E.
2. Applicability of Larger Bench decision in the case of Himalaya International.
3. Interpretation of "allowed to be sold" in the context of duty liability on goods removed from an EOU.
4. Conflict between decisions of different Division Benches on the applicability of the Larger Bench decision.
5. Need for reference to a Larger Bench for clarification.

Issue 1: Eligibility of goods removed without approval from a 100% EOU for exemption under Notification 125/84-C.E.:
The appellant argued that goods clandestinely cleared without permission are eligible for full exemption under relevant notifications, citing a previous case. The Department countered, referencing a Larger Bench decision that duty is leviable on all goods manufactured in an EOU, regardless of permission. The Tribunal noted conflicting decisions by different Benches and deemed it necessary to seek clarification from a Larger Bench on this issue.

Issue 2: Applicability of Larger Bench decision in the case of Himalaya International:
The Department argued that the Tribunal's decision in a previous case wrongly distinguished the Larger Bench decision in Himalaya International, as the Supreme Court had not set it aside. Another case was cited where the Larger Bench decision was applied, emphasizing that the Supreme Court did not overturn it. The Tribunal acknowledged the conflicting interpretations by different Division Benches and decided to refer the matter to a Larger Bench for clarity.

Issue 3: Interpretation of "allowed to be sold" in the context of duty liability on goods removed from an EOU:
The Tribunal discussed the interpretation of "allowed to be sold" in notifications and policy governing EOUs, emphasizing that goods removed without permission are not automatically exempt from duty. Reference was made to a Supreme Court decision highlighting the duty of courts to interpret statutes harmoniously. The Tribunal considered these aspects in the context of the present case.

Issue 4: Conflict between decisions of different Division Benches on the applicability of the Larger Bench decision:
The Tribunal highlighted the conflicting decisions of different Division Benches regarding the applicability of the Larger Bench decision in the case of Himalaya International. One Division Bench set aside the decision, while another upheld it, leading to uncertainty. To resolve this conflict and ensure consistency in interpretation, the Tribunal decided to refer the matter to a Larger Bench for a comprehensive analysis.

Issue 5: Need for reference to a Larger Bench for clarification:
Considering the contradictory decisions by different Division Benches and the importance of resolving the interpretation of relevant notifications and precedents, the Tribunal directed the matter to be referred to a Larger Bench for a detailed examination. This step was deemed necessary to address the conflicting views and establish a consistent legal position on the issues raised in the present case.

This detailed analysis of the judgment highlights the complex legal issues surrounding the eligibility of goods removed without approval from a 100% EOU for exemption under specific notifications, the conflicting interpretations of relevant precedents by different Benches, and the need for a Larger Bench reference to ensure clarity and consistency in legal interpretation.