2011 (6) TMI 652 - AT - Central Excise

Stay application - 100% EOU - yarn was sold by the appellants in Domestic Tariff Area (DTA) against foreign exchange subject to the permission given by the competent authority under para 9.10 (b) of Export Import Policy 1997-2002 - Held that - prior to 16/09/99 the appellant was liable to pay excise duty equal to 50% of the duties leviable under Section 12 of the Customs Act, i.e. 50% of the basic customs duty. Only with effect from 16/09/99, the appellant is liable to pay excise duty equal to 50% of the aggregate of each of the duties of customs leviable under the Customs Act, 1962 or under any other law for time being in force, i.e. 50% of each of the aggregate of duties of customs leviable, namely, basic customs duty (BCD) leviable under section 12 of the Customs Act, countervailing duty (CVD) leviable under section 3 of the Customs Tariff Act, 1975 and special additional duty of customs (SAD) leviable under section 3A of the said Customs Tariff Act and cess under the Textile Committee Act, order set aside and remit the case back to the adjudicating authority, appeal is allowed

Summary

Issues:
Calculation of excise duty payable by the appellant for clearances made in DTA under specific notifications and policies.

Analysis:
1. The case involved an appeal against an order passed by the Commissioner of Central Excise, Thane-II, following a directive from the Hon'ble apex Court. The appellant, a 100% EOU engaged in manufacturing, was alleged to have underpaid excise duty on goods cleared in DTA. The dispute revolved around the interpretation of Notification No.2/95-CE dated 04/01/95 and para 9.10 (b) of the Export Import Policy 1997-2002.

2. The appellant argued that prior to 16/09/99, they were only liable to pay excise duty equal to 50% of the aggregate of Customs duty leviable under Section 12 of the Customs Act, excluding CVD and SAD. The Commissioner, however, confirmed a higher duty demand, leading to a penalty and interest imposition. The appellant sought a refund based on their interpretation of the notification and policy.

3. The Tribunal analyzed the provisions of Notification No.2/95-CE and the subsequent amendment through Notification No.38/99-CE. The Tribunal concurred with the appellant's interpretation that prior to 16/09/99, excise duty was limited to 50% of the basic customs duty under Section 12 of the Customs Act, excluding CVD and SAD. The Tribunal referenced previous decisions like Modern Denim Ltd. and Fabworth (India) Ltd. to support this interpretation.

4. Considering the legal position and precedents, the Tribunal set aside the Commissioner's order, remitting the case for redetermination of duty liability in line with the correct interpretation. The excess duty paid was to be refunded, and the penalty imposed was revoked. The appeal was allowed in favor of the appellant, highlighting the importance of adhering to the specific provisions of relevant notifications and policies in excise duty calculations.