2003 (1) TMI 151 - AT - Central Excise

Summary

Issues:
1. Applicability of Rule 13 of the Central Excise Rules, 1944 to a 100% Export Oriented Undertaking (EOU).

Analysis:
The main issue in this appeal was whether Rule 13 of the Central Excise Rules, 1944 is applicable to a 100% EOU. The appellant argued that they had obtained permission for sales in the Domestic Tariff Area (DTA) under the Export-Import Policy and had followed the necessary procedures under Chapter X of the Central Excise Rules. They contended that Rule 13 allows for the removal of excisable material without payment of duty for the manufacture of export goods. The appellant also referred to Circular No. 314/30/97-CX, dated 6-5-97, which clarified the applicability of Rule 13 to a 100% EOU. Additionally, they argued that the penalty under Rule 173Q of the Central Excise Rules cannot be imposed on a 100% EOU as per Rule 173A.

On the other hand, the respondent argued that 100% EOUs are governed by Chapter VA of the Central Excise Rules, and in case of a conflict, the provisions of Chapter VA prevail over other rules. They cited a previous decision to support their argument that specific provisions for 100% EOUs override general provisions. The respondent contended that Rule 13 and the notification issued under it would not be applicable to a 100% EOU.

After considering the submissions from both sides, the tribunal found that the appellant had followed the procedures under Chapter X of the Central Excise Rules for clearing goods in the DTA. The tribunal noted that Rule 13(1)(b) allows for the removal of materials without payment of duty for use in the manufacture of export goods. They found that there was no provision in Rule 13, the notification issued under it, or Chapter VA that prevented the removal of goods by a 100% EOU to a manufacturer-exporter without payment of duty. The tribunal also highlighted Rule 100H, which exempts certain rules for goods produced by a 100% EOU, without mentioning Rule 13. They further pointed out that the exemption under Notification No. 47/94 was available to the appellants. As a result, the tribunal allowed the appeal, staying the recovery of central excise duty and penalty imposed on the appellant.

In conclusion, the tribunal held that Rule 13 of the Central Excise Rules, 1944 is applicable to a 100% EOU, and the benefit of Notification No. 47/94 was available to the appellants, allowing the appeal and setting aside the demand of duty and penalty.