2015 (4) TMI 810 - AT - Central Excise

100% EOU - Concessional rate of duty - Notification No. 23/2003-CE dated 31/3/2003 - DTA Clearances - Held that - It is clear that for the purpose of DTA sale of by-product, specific permission is not required. If LOP in respect of by-products is obtained, it is sufficient requirement for sale of by-product in DTA as envisaged in Para IV. Sale of by-products is permitted under clarification issued on 19/8/1992. On going through the LOP, we observed that the LOP was issued in respect of by-product namely Hydrochloric Acid. Therefore, in terms of clarification, it provides that the sale of such by-product in the DTA may be made if such sale is permitted in the letter of permission (LOP)/letter of intent (LOI). Accordingly, a separate and specific permission is not warranted. - concessional Notification No. 23/2003 CE could not have been denied to the appellant only for the reason that they have not obtained the specific permission for sale of by-product under DTA. However, the appellant is required to comply with other conditions of policy and notification such as the total sale in DTA should not exceed 50% of FOB value of export clearance, achievement of positive NFE etc. We therefore remand the matter to the original adjudicating authority with the direction that the benefit of Notification No. 23/2003-CE should not be denied for want of specific permission. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Denial of exemption under Notification No. 23/2003-CE due to lack of permission for DTA sale of byproduct.
2. Interpretation of Circular No. 31/2001-Cus regarding DTA sale of by-products by EOUs/EPZ Units.

Analysis:
Issue 1: The appellant, a 100% EOU manufacturing Water Treatment Chemical, cleared the byproduct Hydrochloric Acid in the domestic market under concessional duty availing Notification No. 23/2003-CE. The dispute arose as the authorities contended that specific permission for DTA sale of the byproduct was not obtained, leading to denial of the concessional rate and imposition of duty, penalty, and interest. The appellant argued that all conditions for DTA clearance were met except permission, citing a previous order where such permission was available. The appellant relied on Board Circulars to support their position that specific permission was not necessary if permitted in the Letter of Permission (LOP). The Tribunal found that as the LOP covered the byproduct Hydrochloric Acid, no separate permission was required for DTA sale. The Tribunal remanded the matter to verify compliance with other conditions under the policy and notification.

Issue 2: The Tribunal analyzed Circular No. 31/2001-Cus, which clarified that for DTA sale of by-products, specific permission was not mandatory if allowed in the LOP. The Circular emphasized that sale of by-products generated by an EOU/EPZ unit did not require separate permission if permitted in the LOP. The Tribunal concluded that as the LOP included the byproduct Hydrochloric Acid, no additional permission was necessary for DTA sale. The Tribunal highlighted the importance of complying with conditions like limiting DTA sales to 50% of FOB value of exports and achieving positive NFE. The judgment emphasized that denial of Notification No. 23/2003-CE solely based on lack of specific permission was incorrect, and the appellant should be granted the benefit of the notification.

Overall, the Tribunal allowed the appeal by remanding the matter to ensure compliance with conditions other than specific permission for DTA sale, emphasizing that the appellant should not be denied the benefit of Notification No. 23/2003-CE due to the lack of separate permission for the byproduct sale.