2018 (2) TMI 693 - AT - Central Excise

100% EOU - whether the respondents are liable to pay education cess for the third time while calculating the duty demand? - Held that - once education cess is added to the customs duties to arrive the aggregate of customs duties, the question of charging education cess again does not arise - reliance placed in respondent own case EID Parry (India) Ltd. Versus CCE & ST, LTU Chennai And Vice-Versa 2017 (9) TMI 876 - CESTAT CHENNAI - appeal dismissed - decided against Revenue.

Summary

Issues:
- Duty liability of 100% EOU for clearing products to DTA without payment of full duties
- Eligibility for exemption or concession under Notification No.23/2003-CE
- Education cess component on duty demand calculation
- Appeal against duty demand confirmation and penalty imposition

Analysis:
1. Duty liability of 100% EOU for clearing products to DTA without payment of full duties:
The case involved a 100% Export Oriented Unit (EOU) engaged in manufacturing various products, including Neem Oil and Neem Cake, which were cleared to the Domestic Tariff Area (DTA) without paying the full duties. The Department contended that the products cannot be sold to DTA without full duty payment as if they were imported into India. A Show Cause Notice (SCN) was issued demanding duty payment along with interest and penalties. The Commissioner held that the EOU was not eligible for exemption under Notification No.23/2003 and was liable to pay the duty.

2. Eligibility for exemption or concession under Notification No.23/2003-CE:
The Commissioner confirmed a substantial duty amount to be paid by the EOU, along with interest and penalties. The EOU contested the duty demand, arguing that they were entitled to exemption or concession under Notification No.23/2003. However, the Department was aggrieved by a reduction in the duty demand, leading to the matter being brought before the Tribunal for adjudication.

3. Education cess component on duty demand calculation:
The issue of education cess calculation was crucial in determining the duty liability. The EOU argued that they should not be charged education cess multiple times for the same duty demand. Citing precedents and previous decisions, the EOU contended that the education cess added to customs duties should not be charged again. The Tribunal agreed with this argument, citing relevant case law and holding that the additional liability on education cess was not sustainable.

4. Appeal against duty demand confirmation and penalty imposition:
Ultimately, the Tribunal dismissed the appeal filed by the Department, finding it without merit. The Tribunal upheld the position that the EOU was not liable for the additional education cess demanded, as it had already been accounted for in the customs duties. The judgment highlighted the settled legal position on this issue, referencing previous decisions and affirming the EOU's argument in this regard.