2001 (6) TMI 90 - AT - Central Excise

Summary

Issues Involved:
The issues involved in this case are the eligibility of a 100% Export Oriented Unit (EOU) to avail the benefit of certain notifications for exemption from additional duty of Customs, the interpretation of Notification Nos. 5/98-C.E. and 5/99-C.E., and the liability of the EOU to pay Central Excise Duty for goods cleared in the Domestic Tariff Area (DTA).

Eligibility of 100% EOU for Exemption:
The appeal was filed by the Revenue against the impugned order in appeal which allowed the benefit of Notification Nos. 5/98-C.E. and 5/99-C.E. to the respondents, a 100% EOU engaged in manufacturing LDPE plastic granules and agglomerates. The Revenue contended that the EOU was not eligible for the exemption and should pay additional duty of Customs. The Deputy Commissioner confirmed the duty demand and imposed a penalty, but the Commissioner (Appeals) reversed this decision. The Revenue argued that the goods manufactured by the EOU were liable to pay additional duty of Customs under the Customs Act. However, the Commissioner (Appeals) relied on judgments of the Delhi High Court and the Gujarat High Court to support the EOU's eligibility for exemption.

Interpretation of Notification Nos. 5/98-C.E. and 5/99-C.E.:
The Notifications provided exemption to plastic materials reprocessed in India from Excise Duty, subject to specific conditions. The Deputy Commissioner initially denied the benefit of these Notifications to the respondents based on the reprocessing location. However, the Commissioner (Appeals) disagreed, stating that the reprocessing being done in a 100% EOU in India fulfilled the conditions of the Notifications. The Commissioner (Appeals) also referenced the Delhi High Court judgment which quashed a Board Circular denying the exemption, emphasizing that the Circular was not in accordance with the law.

Liability of EOU for Central Excise Duty:
The Deputy Commissioner had imposed duty demand and penalty on the respondents, considering the EOU liable to pay Central Excise Duty for goods cleared in the DTA. The Commissioner (Appeals) overturned this decision, citing judgments from the Delhi High Court and the Gujarat High Court which held that the Circular denying the exemption was contrary to law. The Commissioner (Appeals) found the impugned order to be valid and dismissed the Revenue's appeal for lack of merit.

In conclusion, the Appellate Tribunal upheld the decision of the Commissioner (Appeals) in favor of the 100% EOU, emphasizing the eligibility of the EOU for exemption under the relevant Notifications and the incorrectness of denying such benefits based on the Circular.