2014 (12) TMI 1122 - AT - Central Excise

Waiver of pre deposit - 100% EOU - exemption from the aggregate duties of Customs - Notification No. 10/97-C.E. dated 1-3-1997 - Delay in filing of the ER-2 return - order beyond the scope of SCN - Held that - decision in Webel-SL. Energy Systems Ltd. (2010 (1) TMI 417 - CESTAT KOLKATA) the said Circular was not before the Bench. Further the said Order does not consider the Final Order in Shanta Biotechnics Ltd. 2010 (7) TMI 334 - CESTAT BANGALORE either. The stay order in Webel-SL. Energy Systems Ltd. was considered by the Tribunal in A.R. Stahchem (P) Ltd. 2012 (4) TMI 523 - CESTAT KOLKATA and overruled. Prima facie we are also not in agreement with the prima facie ruling in Webel-SL. Energy Systems Ltd. In the circumstances we waive the requirement of pre-deposit of dues arising from the impugned order for admission of appeal. Further there shall be stay on collection of such dues during the pendency of the appeal. - Stay granted.

Summary

Issues:
1. Applicability of Notification No. 10/97-C.E. to 100% EOU clearances.
2. Classification of goods under Heading 9030 40 00 or 8527 99 00.
3. Interpretation of Section 5A(1) of the Central Excise Act regarding exemption for EOU.

Analysis:
1. The judgment addresses the issue of whether Notification No. 10/97-C.E. applies to clearances from a 100% EOU. The Revenue argued that the notification does not apply to EOU clearances due to provisos under Section 5A(1) and Section 3(1) of the Central Excise Act. The applicant claimed exemption under this notification for calculating CVD component. The Tribunal considered the circular F. No. DGEP/EOU/3/2007 and past decisions, ultimately waiving the pre-deposit requirement and granting a stay on dues during the appeal, citing the benefit of the circular and previous rulings.

2. Another issue pertained to the classification of goods under Heading 9030 40 00 or 8527 99 00. The applicant argued that the adjudicating authority classified the goods under the latter heading, deviating from the classification claimed in the ER-2 return. This classification impacted the rate of Basic Customs Duty payable. The Tribunal noted this discrepancy and considered the argument regarding the classification of goods, which could affect the duty liability.

3. The interpretation of Section 5A(1) of the Central Excise Act was crucial in determining the availability of exemption for EOU clearances. The applicant contended that the exemption under Notification No. 10/97-C.E. should apply for calculating the CVD component, as it does for importers of similar goods. The Revenue emphasized the separate legal provisions for EOUs and the proviso under Section 5A(1) restricting the application of notifications to EOU clearances. The Tribunal examined relevant decisions and circulars to conclude that the exemption could be availed for calculating the CVD duty, leading to the decision to admit the appeal without pre-deposit and granting a stay on dues.

In conclusion, the judgment delves into the nuances of EOU clearances, classification of goods, and the interpretation of statutory provisions to determine the applicability of exemptions and duty liabilities. The Tribunal's analysis considered past rulings, circulars, and legal arguments to arrive at a decision favoring the applicant in terms of pre-deposit requirements and stay on dues during the appeal process.