2012 (10) TMI 499 - AT - Central Excise

What is the rate at which additional duty of customs (CVD) is to be levied - goods cleared by the appellant s EOU to the Domestic Tariff Area Held that - Additional duty of customs shall be reckoned on the effective rate and not tariff rate - duty leviable under Section 3 of the Central Excise Act is to be calculated after giving effect to the exemption notifications. Therefore, goods produced in EOUs/EPZs cannot be charged to duty at Tariff rate - in favour of assessee

Summary

Issues:
1. Liability to pay Customs duty foregone on goods brought into EOU for dis-assembly and segregation.
2. Availment of Notification No. 21/2002-Cus. benefit for discharge of duty liability on ferrous scrap cleared to melting units.

Analysis:

Issue 1:
The appellant, a 100% EOU, imported burned transformers for dis-assembly and segregation of scrap, treated as manufacturing activity. The Development Commissioner permitted this activity, considering it as manufacturing. The Tribunal held that since the appellant segregated the scrap and cleared it from EOU, it amounted to manufacturing. Therefore, no Customs duty demand was justified, citing precedents like Sanjari Twisters, Dupont Synthetics, and Amitex Silk Mills.

Issue 2:
Regarding the benefit of Notification No. 21/2002-Cus., the appellant cleared ferrous scrap to melting units in DTA. The lower authorities rejected the end use certificate produced later. The Tribunal disagreed, stating that if the benefit of notification is available and the certificates are correct, denial of the benefit is incorrect. Citing Ratangiri Textiles case, the Tribunal emphasized that duty should be levied at effective rates, not tariff rates, settling the issue in favor of the appellant.

In conclusion, the Tribunal set aside the impugned order and allowed the appeals with any consequential relief. The judgment clarified the liability for Customs duty foregone on goods brought into EOU for dis-assembly and segregation, as well as the availment of Notification No. 21/2002-Cus. benefit for discharge of duty liability on ferrous scrap cleared to melting units. The decision was pronounced on 15-12-2011.