2016 (12) TMI 781 - AT - Central Excise

100% EOU - Eligibility for concessional rate of duty under notification no. 8/97-CE dated 1st March 1997 - clearance of cotton yarn to DTA - Held that - a more fundamental issue has not been considered by the lower authorities, viz. the appellant s contention that they have used only domestic procurements for clearances effected domestically and that they have records to establish the contention. This aspect needs consideration - we set aside the impugned order and remand the matter back to the original authority to determine whether the domestically cleared yarn has been manufactured out of domestically procured materials including consumables and to pass a fresh order thereafter - appeal allowed by way of remand.

Summary

Issues involved:
Eligibility for concessional rate of duty under notification no. 8/97-CE dated 1st March 1997.

Analysis:

Issue 1: Eligibility for concessional rate of duty
The issue revolved around the eligibility of M/s Eurotex Industries & Exports Ltd. for the concessional rate of duty under notification no. 8/97-CE dated 1st March 1997. The appellant, a 100% Export Oriented Unit manufacturing cotton yarn, claimed to maintain separate records for export and domestic clearance. The demand for differential duty was based on the use of imported paper cones and wax rolls for manufacturing yarn cleared domestically. The appellant argued that domestically procured cones and wax rolls were used, and even if imported materials were used, the entitlement to clear at the concessional rate could not be denied as the requirement of domestic procurement in the exemption notification was limited to raw materials. The Tribunal referred to previous judgments and tests by the Apex Court to determine the nature of imported materials as raw materials. The Tribunal emphasized the distinction between consumables and raw materials, ultimately remanding the matter back to the original authority to determine if domestically cleared yarn was manufactured from domestically procured materials, including consumables.

Conclusion:
The Tribunal, comprising Dr. Satish Chandra and Mr. C J Mathew, addressed the issue of eligibility for concessional rate of duty under notification no. 8/97-CE dated 1st March 1997. The judgment highlighted the importance of differentiating between raw materials and consumables in determining eligibility for the concessional rate of duty. The decision emphasized the need for the original authority to ascertain if domestically cleared yarn was manufactured from domestically procured materials, including consumables, before passing a fresh order.