2022 (4) TMI 251 - AT - Central Excise

100% EOU - benefit of concessional rate of duty - clearance of paper waste after segregation process of waste imported during the period October, 2003 to January, 2005 - activity undertaken by the appellant for segregation were covered by the definition of Manufacture w.e.f. 01.04.2002 as per EXIM Policy 2002 to 2007 or not - benefit of concessional N/N. 23/2003 dated 31.03.2003, denied on the ground that the appellant has not made any physical export and not taken permission for DTA sales - extended period of limitation - HELD THAT - As the activity undertaken by the appellant amounts to manufacture, therefore, the appellant is entitled for the benefit of Notification no. 23/2003-CE dated 31.03.2003 for payment of duty at concessional rate. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility for concessional rate of duty under Notification No. 23/2003 dated 31.03.2003 for clearance of paper waste by a 100% EOU.
2. Applicability of extended period of limitation for demanding differential excise duty.
3. Interpretation of the definition of "Manufacture" under EXIM Policy 2002 to 2007 for entitlement to duty benefits.
4. Benefit of Notification No. 21/2002 for discharge of Central Excise duty cleared from EOU to DTA.
5. Dispute regarding the rate of additional duty of customs (CVD) on goods cleared by EOUs to DTA.

Analysis:
1. The appellant, a 100% EOU, cleared paper waste after segregation on concessional duty under Notification No. 23/2003. Revenue contended in a Show Cause Notice that without physical export or permission for DTA sales, the appellant was not eligible. Tribunal held in appellant's favor citing previous cases, rejecting Revenue's argument and setting aside the demand.

2. The appellant argued that the demand was time-barred, as all details were disclosed. The Authorized Representative cited a different case but failed to convince the Tribunal. The Tribunal found no suppression of facts by the appellant, setting aside the penalty and interest imposed.

3. The crux of the issue was the definition of "Manufacture" under the EXIM Policy 2002 to 2007. The Revenue claimed the appellant's activity did not qualify, thus denying concessional duty. However, the Tribunal disagreed, citing circulars and precedents, ruling in favor of the appellant's entitlement to the benefit.

4. Regarding the benefit of Notification No. 21/2002 for duty discharge from EOU to DTA, the Tribunal emphasized the correct interpretation of end-use certificates. Relying on previous judgments and circulars, the Tribunal found in favor of the appellant, allowing the appeal and setting aside the impugned orders.

5. Lastly, the dispute over the rate of additional duty of customs (CVD) on goods cleared by EOUs to DTA was resolved in favor of the appellants. Citing judgments and circulars, the Tribunal held that duty should be levied at effective rates, not tariff rates, granting relief to the appellants and allowing the appeals with consequential relief.