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2019 (5) TMI 581 - AT - Central Excise100% EOU - short payment of duty - manufacture and export of goods - leakage in transit - duty paid at effective rate under Notification 23/03-CE dated 31.03.2003 (Concessional rate of duty) - case of the department is that the appellant being 100% EOU are required to pay duty equal to the amount of the aggregate of duties of customs in terms of Proviso to sub-section (1) of Section 3 of Central Excise Act, 1944 on the said consignment. HELD THAT - From Proviso to sub-section (1) of section 3 of Central Excise Act, 1944, it is clear that any manufactured goods by 100% EOU when cleared in DTA are liable for duty equal to the amount of the aggregate of duty of customs. This issue is covered by the decision of this Tribunal in the case of CCE ST-Surat-I Vs. Rajvani Synthetics Pvt. Ltd 2018 (12) TMI 1175 - CESTAT AHMEDABAD where it was held that the duty liability on goods not specifically allowed by the Development Commissioner to be cleared to the DTA, would arise under section 3(1) of the Central Excise Act, 1944 and not under the proviso to section 3(1) of the Central Excise Act, 1944. Demand upheld - appeal dismissed - decided against appellant.
Issues:
1. Whether the appellant is required to pay duty at the concessional rate under Notification 23/03-CE dated 31.03.2003 or duty equal to the aggregate of duties of customs in terms of proviso to sub-section (1) of Section 3 of Central Excise Act, 1944. Analysis: The case involved an appellant, a 100% Export Oriented Unit (EOU), who manufactured and cleared goods for export but due to leakage in transit, the goods were brought back into the factory. The appellant paid duty at an effective rate under Notification 23/03-CE dated 31.03.2003. The department contended that as a 100% EOU, the appellant was required to pay duty equal to the aggregate of customs duties under the Central Excise Act, resulting in a short payment of duty. The main issue was whether the appellant should pay duty at the concessional rate or the aggregate of customs duties as per the proviso to sub-section (1) of Section 3 of the Central Excise Act, 1944. The Tribunal heard arguments from both sides and analyzed the relevant legal provisions. It was observed that goods manufactured by a 100% EOU and cleared in the Domestic Tariff Area (DTA) are liable for duty equal to the aggregate of customs duties. The Tribunal referred to a previous decision in the case of CCE & ST-Surat-I Vs. Rajvani Synthetics Pvt. Ltd 2018 (12) TMI 1175 (CESTAT-Ahmedabad) which supported the position that duty should be paid at the aggregate of customs duties for goods cleared by a 100% EOU. Consequently, the Tribunal upheld the demand raised by the Revenue, leading to the dismissal of the appeal. In conclusion, the judgment clarified that goods manufactured by a 100% EOU and brought to DTA are subject to duty equal to the aggregate of customs duties, as per the proviso to sub-section (1) of Section 3 of the Central Excise Act, 1944. The decision was based on legal precedent and upheld the demand for duty payment in this specific case.
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