2013 (7) TMI 341 - AT - Central Excise

Benefit of exemption under Notification No. .8 /97-CE, dt.01.03.1997 - Goods manufactured by 100% EOU and cleared to Domestic Tariff Area out of raw material/manufactured goods procured from another 100% EOU Held that - Benefit of exemption under Notification No.8 /97-CE is available where raw materials supplied by another 100% EOU are used by a 100% EOU and that such raw materials or goods belonging to 100% EOU would constitute raw materials or goods produced or manufactured in India This issue been concluded by the decision of Supreme Court in Commissioner of Central Excise, Surat -I Vs Favourite Industries 2012 (4) TMI 65 - SUPREME COURT OF INDIA Decided against the Revenue.

Summary

Issues:
- Eligibility of goods manufactured by 100% EOU and cleared to Domestic Tariff Area for exemption under Notification No.8/97-CE.

Analysis:
The judgment deals with the issue of whether goods manufactured by a 100% Export Oriented Unit (EOU) and cleared to the Domestic Tariff Area out of raw materials procured from another 100% EOU are eligible for exemption under Notification No.8/97-CE. The Tribunal was tasked with considering a conflict between the decisions in Favourite Industries Vs CCE, Surat and Jaipur Golden Transport Co. Pvt. Ltd. Vs CCE Surat. The Supreme Court, in a subsequent case, upheld the decision of the Tribunal in Favourite Industries, ruling that the benefit of exemption is available when raw materials supplied by another 100% EOU are used by a 100% EOU, and such materials would be considered as produced or manufactured in India. This clarification rendered the issue referred to the Larger Bench redundant, as it was conclusively settled by the Supreme Court's decision in Commissioner of Central Excise, Surat -I Vs Favourite Industries.

In essence, the Tribunal's decision was based on the interpretation of the expression "produced or manufactured" in the context of 100% EOU operations. The Supreme Court's ruling provided clarity that goods manufactured by a 100% EOU using raw materials from another 100% EOU would qualify for exemption under Notification No.8/97-CE. This judgment effectively resolved the conflict between the previous decisions and established a clear precedent for such cases in the future. The rejection of the reference to the Larger Bench was justified on the grounds that the issue had already been authoritatively addressed by the Supreme Court, thereby removing any ambiguity or need for further adjudication on the matter.

Overall, the judgment serves as a significant clarification on the eligibility of goods for exemption under specific notifications concerning 100% EOU operations. It underscores the importance of legal interpretation and precedent in resolving conflicts and providing certainty in tax matters related to EOU activities. The decision not only settles the immediate dispute but also sets a precedent for similar cases, ensuring consistency and predictability in the application of tax laws in such scenarios.