2014 (3) TMI 94 - AT - Customs

100% EOU - Benefit of exemption under Notification Nos. 6/97-C.E., dated 1-3-1997 and 23/2003-C.E., dated 31-3-2003 - Goods cleared without payment of duty in the Domestic Tariff Area - Held that - for availing the benefit of aforesaid notifications, the rejects, wastes, scrap and remnants arising out of processing, manufacture, production, packaging of articles should be cleared to the Domestic Tariff Area on payment of applicable duty of excise. The question is, what is the applicable duty of excise in respect of cotton waste. Notification No. 6/97 exempts cotton waste falling under Heading No. 52.02 of the Central Excise Tariff Act, unconditionally, produced or manufactured by a 100% EOU and allowed to be sold in India. Similarly, Notification No. 23/2003-C.E., dated 31-3-2003 also exempts cotton waste falling under Heading 52.02 when manufactured by a 100% EOU and allowed to be sold in India. These two Notifications specifically deals with the exemption on cotton waste manufactured in a 100% EOU and allowed to be sold in India and provides excise duty exemption on such cotton waste. Therefore, the applicable rate of duty of excise on cotton waste manufactured in a 100% EOU and allowed to be sold in India is nil and the applicant has discharged the duty liability in accordance with the aforesaid notifications. Therefore, prima facie, we are of the view that the appellants have fulfilled the terms and conditions of para 3 of the Notification 52/2003-Cus. and para 6 of the Notification No. 22/2003-C.E. and we do not find any infirmity with the said availment - Decided in favour of assessee.

Summary

Issues:
Appeals against Order-in-Appeal Nos. SB/243 to 248/Th-II/10 dated 23-11-2010 passed by the Commissioner of Central Excise (Appeals), Mumbai.

Analysis:
1. The appellants, a 100% EOU engaged in manufacturing cotton yarn and fabrics, imported and procured raw cotton and fuel oil. They cleared cotton waste without duty payment under exemptions. The department demanded customs duty for imported/procured items used in the waste. Appeals were rejected, leading to the current appeal.

2. The appellants argued that since they cleared waste under exemptions, they are not liable for customs duty on imported/procured items. They cited relevant notifications and case laws to support their stance.

3. The Revenue argued that to avail exemptions, the appellants should have paid excise duty on cleared waste. They contended that the duty payment condition implies actual duty payment. They sought to uphold the impugned order.

4. The Tribunal examined Notification No. 52/2003-Cus. and No. 23/2003-C.E. which require payment of applicable excise duty on waste cleared domestically. The notifications exempt cotton waste produced by a 100% EOU. As the waste was cleared under these exemptions, the duty liability was discharged.

5. Referring to case laws like Maharashtra Steel and N.B. Sanjana, the Tribunal noted that 'paid' includes 'nil' duty under exemptions. The judgment clarified that duty payment does not require assessment and actual payment if exemptions apply. This principle was deemed applicable in this case.

6. Considering the above, the Tribunal found the appellants had a prima facie case for complete waiver of pre-deposit of dues adjudged. Consequently, they granted a complete waiver and stayed the recovery during the appeal's pendency.