2015 (4) TMI 733 - AT - Central Excise

100% EOU - Exemption from Basic Customs Duty under Notification No. 21/02-CUS (Sl. No. 200) - Steel scrap cleared into DTA - whether the duty on the DTA clearances is paid at the concessional rate under Notification No. 23/03-CE or the duty is paid without availing of this exemption on the full rate prescribed under proviso to Section 3 (1), the Basic Customs Duty would have to be calculated at the rate applicable to the import of like goods into India, readwith any customs duty exemption notification issued under Section 25 of the Customs Act, 1962 and if in respect of any imported goods, the effective rate of duty is nil, it is the that rate which would have to be adopted and the basic Customs duty component of the excise duty payable on the DTA clearances would be nil. Held that - if some goods imported into India are fully and unconditionally exempt from Basic Customs Duty by some exemption notification, while calculating the Central Excise Duty leviable on the DTA clearances of those goods, the Basic Customs Duty would have to be taken as nil, even if those DTA clearances are not in accordance with the conditions prescribed in para 6.8 of the Foreign Trade Policy. It is seen that same view has been taken by the Board in its Circular No. 305/83/94-FTT dated 15/09/1994. - the nature of the scrap cannot be determined on the basis as to whether it has been sold the actual users or the dealers, as only use to which Iron and Steel Scrap can be put, is by melting the same to make some other Iron and Steel products. Same view has been taken by the Tribunal in its judgments in the case of Indo Deutsche Trade Links vs. CC (Imports), Chennai reported in 2014 (2) TMI 779 - CESTAT CHENNAI of the judgment. - part of the impugned order confirming the duty demand on the basis of denial of exemption under Notification No. 21/02-CUS in respect of Basic Customs Duty is not sustainable and the same has to be set aside. As regards the exemption from the portion of the Central Excise Duty equivalent to the Special Additional Customs Duty (SAD) payable under Section 3 (5) of the Customs Tariff Act, the Department s contention is that the SAD would be payable as the clearances are not in terms of para 6.8 (a) of the Foreign Trade Policy and as such the exemption in terms of Sl. No. 1 of the table annexed to exemption Notification No. 23/03-CE would not be applicable. - Since on the goods sold into DTA, VAT levied by the State Government has been paid, and in this regard, there is no dispute, the conditions of exemption Notification No. 102/2007-CUS dated 14/09/07, as applicable to the DTA clearances of a 100% EOU, have been substantially satisfied and hence the goods would be fully exempt from SAD as, in our view, the benefit of this notification, which has been issued for the goods imported by person for subsequent sale and whose condition have been prescribed accordingly, cannot be denied in respect of DTA clearances of a 100% EOU if the condition as applicable mutatis mutandis to DTA sales are satisfied. The duty demand based on this issue is also not sustainable. - Decided in favour of assessee.

Summary

Issues: Dispute over calculation of education cess and S&H cess, Exemption from Basic Customs Duty under Notification No. 21/02-CUS, Exemption from Special Additional Customs Duty (SAD)

Dispute over calculation of education cess and S&H cess:
The appellant, a 100% EOU manufacturing automobile parts, faced objections from the Department regarding the method of calculating education cess and S&H cess on scrap clearances into DTA. The Department argued for multiple cess levies on the aggregate of customs duties. However, the Tribunal ruled in favor of the appellant based on a previous Larger Bench judgment, setting aside the duty demand related to this issue.

Exemption from Basic Customs Duty under Notification No. 21/02-CUS:
The Department contested the appellant's eligibility for Basic Customs Duty exemption on steel scrap cleared into DTA, claiming the scrap was not melting scrap and not sold to actual users. The Tribunal disagreed, emphasizing that the nature of scrap is determined by its use in melting, not the buyer. The Tribunal cited a similar judgment supporting this stance and set aside the duty demand linked to denial of this exemption.

Exemption from Special Additional Customs Duty (SAD):
Another objection raised by the Department concerned the exemption from SAD on DTA clearances, contending that the clearances did not comply with specific Foreign Trade Policy provisions. However, the Tribunal found that since VAT had been paid on goods sold into DTA, meeting the conditions of an exemption notification, the SAD exemption was valid. The duty demand associated with this issue was also deemed unsustainable and set aside.

In conclusion, the Tribunal found the impugned order unsustainable and set it aside, allowing the appeals in favor of the appellant. The judgment clarified the applicability of exemptions and upheld the appellant's position on the disputed issues related to education cess, Basic Customs Duty exemption, and SAD exemption.