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2001 (10) TMI 137 - AT - Central Excise
Issues involved: Determination of duty rate for goods cleared to the domestic market from a 100% export oriented unit (EOU) and applicability of Notification 53/97 and Notification 2/95.
Summary: 1. The appellant, an EOU manufacturing polyester yarn, appealed against the duty rate determined by the Commissioner for goods cleared to the domestic market. The Commissioner imposed a penalty under Rule 173Q for contraventions and rejected the appellant's claim for the benefit of Notification 53/97. 2. The Tribunal agreed with the Commissioner that Notification 53/97 did not apply to determine the duty rate for the goods. The notification exempts goods for export or for use in connection with export, not for goods sold in India, as per the Export and Import Policy. 3. The appellant argued for the benefit of Notification 2/95, which fixes the duty value at 50% of the customs duty leviable on like goods imported into India. The Commissioner denied this benefit, stating the goods were not sold in accordance with specified policy paragraphs. 4. The Tribunal analyzed the Policy provisions regarding sales to the domestic market and concluded that the appellant's sales against foreign exchange should be treated as exports. However, not all supplies to the domestic market were entitled to full exemption under Notification 2/95. 5. The Tribunal clarified that the benefit of the notification is subject to fulfilling the minimum net foreign exchange performance, as specified in the Policy. The matter was remanded to the Commissioner for calculating the duty payable based on this provision. 6. The Tribunal acknowledged the debatable nature of interpreting the notification provisions and found no wilful defiance of law by the appellant. The penalty imposed by the Commissioner was set aside due to lack of justification. 7. The appeal was allowed in part, with the Tribunal providing directions for further evidence submission and duty calculation by the Commissioner within a specified timeframe.
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