2005 (1) TMI 297 - AT - Central Excise

Summary

Issues Involved:

1. Whether the value of DTA clearances exceeded 50% of FOB value of physical exports in violation of Notification No. 2/95-C.E.
2. Whether the assessee was eligible for exemption under Notification No. 39/96-Cus. for clearances to DRDO, Thermal Power Corporation, and District Forest Officer, Erode.
3. Whether the assessee was eligible for exemption under Notification No. 51/96-Cus. for clearances to Public Funded Research Institutions (PFRIs).
4. Applicability of the principle of res judicata in quasi-judicial proceedings.
5. Entitlement to abatement of duty from the sale price under Section 4(4)(d)(ii) of the Central Excise Act.

Detailed Analysis:

1. Violation of Notification No. 2/95-C.E.:

The Department alleged that the value of DTA clearances exceeded 50% of the FOB value of physical exports, violating Clause (b) of the 3rd proviso in Notification No. 2/95-C.E. The Commissioner, however, abandoned this issue, effectively rejecting the Department's allegation. Thus, no violation of the said notification was established.

2. Exemption under Notification No. 39/96-Cus.:

The Department contended that the assessee was not eligible for exemption under Notification No. 39/96-Cus., as it applied only to goods imported into India, not to those manufactured in India. The assessee argued that clearances to DRDO, Thermal Power Corporation, and District Forest Officer, Erode, should be treated as "imports" by the State Government and thus covered by the notification. The Tribunal, following the precedent in Akar Tools Ltd. v. CCE, held that conditional notifications could be considered in determining duty liability on DTA clearances. Therefore, the exemption under Notification No. 39/96-Cus. was applicable.

3. Exemption under Notification No. 51/96-Cus.:

Similar to the above, the Department argued that Notification No. 51/96-Cus. was applicable only to goods imported into India. The assessee maintained that clearances to PFRIs should benefit from this exemption. The Tribunal, drawing from the Akar Tools case, concluded that conditional notifications like Notification No. 51/96-Cus. should be considered in computing duty under the proviso to Section 3(1) of the Central Excise Act. Thus, the exemption was applicable.

4. Principle of Res Judicata:

The assessee argued that the earlier favorable decision by the Commissioner of Central Excise, Trichy, should operate as res judicata. The Tribunal, however, accepted the JCDR's argument that res judicata does not apply to quasi-judicial proceedings in Revenue matters, as supported by the Karnataka High Court's ruling in West Coast Paper Mills and the Tribunal's decision in Hewlett Packard Ltd. Therefore, the earlier decision did not bind the present proceedings.

5. Abatement of Duty from Sale Price:

The assessee claimed abatement of duty from the sale price under Section 4(4)(d)(ii) of the Central Excise Act. The Commissioner had denied this benefit, arguing it was not admissible before 14-5-2003. The Tribunal, referencing the Larger Bench decision in Srichakra Tyres Ltd. v. CCE, affirmed by the Supreme Court, held that abatement was available under the pre-existing provisions. However, since the main issue was decided in favor of the assessee, this point became moot.

Conclusion:

The Tribunal held that the assessee was not liable to pay duty on the clearances to DTA under the disputed notifications. The impugned order was set aside, and the appeal was allowed.