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2018 (6) TMI 908 - AT - Central Excise100% EOU - Effect of notification - Department was of the view that appellants cannot avail the concessional duty as under Notification 29/2004 and are liable to pay @ 8% as per tariff rate against CTH 63026000 of Central Excise Tariff Act, 1985 - Held that - For calculating the duty of excise for the purpose of discharging CVD liability, any notification issued in respect of the goods cleared by EOU also has to be taken into consideration. The respondents have thus calculated the CVD on the basis of the concessional rate of duty as in notification 29/2004 or 30/2004. They have not directly claimed the benefit of concessional rate of duty of 29/2004 or 30/2004, instead they have adopted the concessional rate for the purpose of calculation of CVD for claiming exemption for clearances to DTA as per notification 23/2003. In UOI vs Plastic Processors 2005 (4) TMI 581 - SUPREME COURT , the hon ble Apex Court has held that CVD was payable at effective rates and not at tariff rates on clearances made by 100% EOU into DTA. Demand set aside - appeal dismissed - decided against Revenue.
Issues Involved:
1. Applicability of Notification No. 29/2004-CE to 100% Export-Oriented Units (EOUs). 2. Calculation of additional duty of excise (CVD) for goods cleared to Domestic Tariff Area (DTA) by EOUs. 3. Interpretation of Section 5A of the Central Excise Act, 1944 concerning exemptions for EOUs. Issue-Wise Detailed Analysis: 1. Applicability of Notification No. 29/2004-CE to 100% Export-Oriented Units (EOUs): The department argued that Notification No. 29/2004-CE does not specifically mention its applicability to EOUs, and thus, under Section 5A of the Central Excise Act, 1944, the concessional rate of duty in the notification is not applicable to EOUs. The respondents, however, contended that they calculated the additional duty of excise (CVD) based on the effective rate of 4% as per Notification No. 29/2004-CE while clearing goods to DTA, in compliance with Notification No. 23/2003-CE (Sl.No.2). 2. Calculation of additional duty of excise (CVD) for goods cleared to Domestic Tariff Area (DTA) by EOUs: The tribunal examined the proviso to Section 5A, which states that unless specifically provided, no exemption shall apply to goods produced by EOUs. However, it was noted that for calculating the duty of excise for discharging CVD liability, any notification issued in respect of goods cleared by EOUs must be considered. The respondents calculated the CVD using the concessional rate of duty as per Notification No. 29/2004-CE or 30/2004-CE, not directly claiming the benefit but adopting it for CVD calculation purposes. 3. Interpretation of Section 5A of the Central Excise Act, 1944 concerning exemptions for EOUs: The tribunal referenced several judicial decisions to interpret Section 5A. In UOI vs. Plastic Processors, the Supreme Court upheld that CVD was payable at effective rates, not tariff rates, on clearances made by EOUs into DTA. Similarly, in CCE, Lucknow vs. Srivatsa International Ltd, it was clarified that the CVD component for EOUs should be calculated based on the excise duty payable on like products produced in India, considering any concessional rates applicable. The tribunal also cited Shanta Biotechnics Ltd, where it was held that for determining duties of excise under Section 3(1) of the Central Excise Act on goods cleared to DTA by EOUs, exemptions under relevant Customs and Excise Notifications must be provided. The duty payable by EOUs should be determined in the same manner as for imported goods, implying the applicability of concessional rates. Conclusion: The tribunal concluded that the Commissioner (Appeals) correctly appreciated the facts and applied the law by setting aside the demand. The appeals filed by the department were dismissed, affirming that EOUs could calculate CVD liability using the concessional rates under Notification No. 29/2004-CE or 30/2004-CE, following the principles laid out in relevant judicial decisions. The operative part of the order was pronounced in open court.
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