2004 (6) TMI 57 - AT - Central Excise

Summary

Issues:
1. Conflict in interpreting Notification No. 2/95-C.E., dated 4-1-1995 regarding the calculation of duty.
2. Retrospective amendment of Section 3 of the Central Excise Act by Finance Act, 2000.
3. Applicability of Circular dated 6-2-2001 on duty calculation for goods cleared by 100% EOU to DTA.
4. Impact of Notification No. 11/2002, dated 1-3-2002 on duty exemption calculation.

Issue 1 - Calculation of Duty under Notification No. 2/95-C.E., dated 4-1-1995:
The Tribunal referred the conflicting decisions in the cases of Futura Polymers Ltd. and Uniworth Textiles Ltd. regarding the method of computing duty under the Notification. The former interpreted the duty calculation as 50% of each customs duty, while the latter considered it as 50% of the aggregate of customs duties. The Notification was amended by Notification No. 11/2002, dated 1-3-2002, specifying the duty exemption calculation as 50% of the aggregate of customs duties.

Issue 2 - Retrospective Amendment of Section 3 of the Central Excise Act:
The Finance Act, 2000 retrospectively amended Section 3 of the Central Excise Act, stating that duty on goods produced by 100% EOU brought to India should be equivalent to the aggregate of customs duties. This led to the issuance of Circular dated 6-2-2001 by the Board, changing the duty calculation method to 50% of the aggregate of customs duties.

Issue 3 - Applicability of Circular dated 6-2-2001:
During the period of January 2001 to February 2001, the Notification No. 2/95-C.E., dated 4-1-1995, provided duty exemption based on 50% of each customs duty, not on the aggregate of customs duties as per the Circular dated 6-2-2001. The Notification was only amended in 2002 to align with the Circular's calculation method. The Tribunal held that the Circular's method could not override the specific duty calculation provision in the Notification.

Issue 4 - Impact of Notification No. 11/2002, dated 1-3-2002:
The Notification No. 11/2002, dated 1-3-2002, amended the duty exemption calculation to be 50% of the aggregate of customs duties. The Tribunal emphasized that this amendment was crucial in determining the correct method of duty calculation, and the Circular dated 6-2-2001 could only be applied post this amendment.

In conclusion, the Tribunal agreed with the interpretation in the Futura Polymers Ltd. case, emphasizing the importance of the Notification's specific duty calculation provision. The matter was directed to the regular Bench for further consideration on the merits of the appeal.