2010 (4) TMI 954 - AT - Central Excise

Interpretation of statute - second proviso to para 6 of N/N. 22/2003 dated 31-3-2003 - duty on paper and PVC resin - demand on the ground that finished goods are either not excisable or are exempted or charged to nil rate of duty - Held that - the finished goods are excisable but were exempted or charged to nil rate of duty. Hence, for the period prior to amendment i.e., 6-9-2004, the appellants are not required to pay the input duty. However, the same is payable on and after 6-9-2004 - the appellants have paid the duty for the subsequent period from 6-9-2004. Penalty - Held that - Since the issue involves interpretation of the Notification and also the assessments in respect of the EOU is provisional, there is no case of imposition of penalty on the appellants. Appeal allowed - decided partly in favor of assessee.

Summary

Issues: Interpretation of second proviso to para 6 of Notification No. 22/2003 dated 31-3-2003 for duty payment on inputs by EOU.

The judgment by the Appellate Tribunal CESTAT NEW DELHI involved the interpretation of the second proviso to para 6 of Notification No. 22/2003 dated 31-3-2003 concerning duty payment on inputs by an EOU. The appellants had procured duty-free paper and PVC resin under the said Notification as an EOU. They produced books that were not dutiable under Customs or Excise law, some of which were cleared in the DTA with approval from the Development Commissioner for the period from April 2003 to June 2005.

The key issue revolved around the amendment to the paragraph on 6-9-2004, changing the duty payment requirement on inputs. Before this date, duty on inputs was payable if finished goods sold in the DTA were non-excisable. However, post this date, input duty was payable if the finished goods were either not excisable or exempted/charged to nil rate of duty. The finished goods in question were excisable but were exempted or charged to nil rate of duty, leading to the conclusion that for the period before 6-9-2004, the appellants were not obligated to pay the input duty. Nevertheless, the duty became payable from 6-9-2004 onwards, which the appellants had already paid for the subsequent period.

Considering the issue's complexity involving the interpretation of the Notification and the provisional nature of assessments for the EOU, the Tribunal ruled that there was no basis for imposing a penalty on the appellants. Consequently, the impugned order was modified to reflect the above findings, and the appeal was partially allowed. The judgment was pronounced in the Open Court by the Tribunal.