2014 (3) TMI 700 - AT - Central Excise

Denial of exemption in terms of Notification No. 125/84-C.E., dated 26-5-1984 - Clearances against DFRC - Clearances under the permitted DTA quota by Development Commissioner - Held that - Supply of goods to DFRC holders are considered to be as deemed export as per EXIM Policy and the same are not covered by the permission given for DTA sales and as such have to be treated as goods not allowed to be sold in India . Consequently, all the decisions have held that such clearances attract exemption in terms of Notification No. 125/84-C.E., dated 26-5-1984 - in any case, such clearances were exempt under Notification No. 125/84-C.E., dated 26-5-1984. Accordingly, the duty confirmation against the appellant is not called for and the same is, accordingly, set aside - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of Notification No. 28/2001-C.E. and Notification No. 125/84-C.E.
2. Availability of exemption for 100% EOU under Central Excise Act, 1944.
3. Rescission of Notification No. 125/84-C.E. and its impact on the case.
4. Applicability of exemption for clearances to Advance Release Orders holders.

Analysis:
1. The case involved the interpretation of Notification No. 28/2001-C.E. and Notification No. 125/84-C.E. The appellant, a 100% EOU engaged in manufacturing, cleared goods to Advance Release Orders holders. The issue was whether the appellant was liable to pay additional duties of Customs due to their status as an EOU and if they were eligible for exemption under the mentioned notifications.

2. The appellant contended that they were entitled to exemption under Notification No. 125/84-C.E., dated 26-5-1984, which exempted goods produced by a 100% EOU from duty of Excise if not allowed to be sold in India. However, the adjudicating authority denied this claim citing the rescission of the said notification in 1988. The Commissioner (Appeals) also rejected the appellant's alternative claim, leading to the present appeal.

3. The advocate for the appellant argued that Notification No. 125/84-C.E. was actually rescinded in 2003, not in 1988 as claimed by the authorities. He relied on tribunal decisions stating that clearances to DFRC holders are deemed exports and qualify for exemption under Notification No. 125/84-C.E. The decisions emphasized that such clearances were not covered by DTA sales permissions and thus were exempt from duty.

4. The tribunal, following the precedent set by previous decisions, ruled in favor of the appellant. They held that the clearances to DFRC holders were exempt under Notification No. 125/84-C.E., irrespective of the availability of Notification No. 28/2001-C.E. Consequently, the duty confirmation, interest, and penalty imposed on the appellant were set aside, granting them consequential relief.

In conclusion, the appellate tribunal allowed the appeal, providing relief to the appellant based on the interpretation of relevant notifications and the applicability of exemptions for clearances to Advance Release Orders holders.