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2017 (7) TMI 54 - AT - Central Excise100% EOU - manufacture - combed cotton /sliver falling under heading 52.03 of the Central Excise Tariff - Department was of the view that the appellant is required to pay duty on such goods in terms of S.No.4 of N/N. 23/2003 dated 31.3.2003. The appellant resisted the move by arguing that goods cleared in DTA will be liable to payment of Customs duty only when they are subjected to process of manufacture within the meaning of manufacture as defined under section 2(f) of the Central Excise Act, 1944 - whetehr the combed cotton/sliver derived from cotton fabric amounts to manufacture - Held that - The Board s letter has clarified that EOU scheme covers even those activities which may not be strictly considered as manufacture under section 2(f) of the Central Excise Act. Hence, it has been further clarified that exemption under notification No.1/95-CE will also be applicable to a 100% EOU. In the present case, the process of making cotton sliver from fibre, may not amount to manufacture as per section 2(f). But the appellant has been permitted to produce the same and export. As per the 100% EOU scheme, if such goods are cleared into DTA, Customs duty will be payable with benefit of N/N. 23/2003. Appeal dismissed - decided against appellant.
Issues:
- Liability to pay duty on clearance of combed cotton/sliver by a 100% EOU in DTA - Interpretation of the term "manufacture" under Central Excise Act, 1944 - Applicability of Notification No.23/2003 dated 31.3.2003 to goods cleared by 100% EOU Analysis: The case involves an appeal against an order passed by the Commissioner (Appeals), Jaipur, regarding the liability of a 100% EOU engaged in manufacturing cotton yarn and fabrics for export to pay duty on the clearance of combed cotton/sliver in DTA without payment of duty. The department contended that duty was payable on such goods under S.No.4 of Notification No.23/2003. The appellant argued that the goods did not undergo a process amounting to "manufacture" as defined under the Central Excise Act, 1944, and hence, duty was not applicable. During the appeal, the appellant's counsel contended that the disputed goods, combed cotton/sliver, were not manufactured products and therefore not liable for duty upon clearance from the factory of the 100% EOU. The counsel relied on various case laws to support this argument. On the other hand, the Departmental Representative argued that any goods cleared from a 100% EOU are subject to customs duty, citing a CBEC Circular that emphasized a broader interpretation of the term "manufacture" applicable to EOUs. The Tribunal, in its analysis, considered the CBEC Circular and previous decisions to conclude that the process of making combed cotton/sliver should be considered as "manufacture" within the broader view applicable to 100% EOUs. The Tribunal upheld the duty demand, stating that even if the process may not strictly amount to manufacture as per section 2(f) of the Central Excise Act, duty would still be payable when such goods are cleared into DTA, in line with the EOU scheme. The Tribunal differentiated the case laws cited by the appellant's counsel, stating they were not applicable to the present case. Ultimately, the Tribunal sustained the impugned order, rejecting the appeal and upholding the duty demand on the clearance of combed cotton/sliver by the 100% EOU in DTA, with the benefit of Notification No.23/2003. In conclusion, the Tribunal's decision clarified the liability of a 100% EOU to pay duty on goods cleared in DTA, emphasizing a broader interpretation of the term "manufacture" under the EOU scheme and Notification No.23/2003. The judgment highlighted the distinction between the process of manufacturing and the export-oriented activities of EOUs, ultimately affirming the duty demand on the disputed goods.
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