2024 (8) TMI 85 - AT - Central Excise

100% EOU - Concessional Rate of duty for Fabrics of cotton and man-made fibres - entitlement for DTA sale under Para 9.9(b) and 9.20 of the EXIM Policy - contention of the department is that the Appellant had made clearances of their finished goods including rejects and wastes for DTA sales on the basis of 50% of the deemed export including rejects and waste for DTA sale on the basis of 50% of the deemed export value instead of 50% of the FOB value of actual physical exports - whether the appellant is eligible for benefit of exemption Notification No. 20/98 CE as claimed by them or they were required to pay higher rate of duty under Notification No. 13/98-CE as held by Ld. Commissioner? HELD THAT - The Appellant during the period October 2000 to January 2001 had cleared rejects of Polyester Grey Fabrics classifiable under Chapter 52 of the CETA on payment of duty @50% of duty specified in the first schedule to the Central Excise Tariff Act, there is no dispute about the facts that the finished goods are manufactured wholly out of the indigenous raw materials and that the finished goods fall under chapter 52 and 54 as specified in the above Notification. Therefore, there are no irregularity in Appellant s claim related to exemption notification. The Department, however, took the view that Notification No. 13/98, dated 2-6-1998 is applicable, as per which, the Appellant was liable to pay duty at the rate of 30 per cent as this product was manufactured by 100% EOU and cleared in DTA and demanded differential duty - it is found that where there are multiple Notifications operating simultaneously in respect of the same commodity and extending different benefits, an option must be given to the assessee to choose the Notification that would be most beneficial to it. The assessee has to be permitted to elect and choose the Notification of its choice and the Department cannot thrust a Notification of its choice upon the assessee - the view is supported by two judgments of the Supreme Court in the case of H.C.L. Limited v. Collector of Customs, New Delhi, 2001 (3) TMI 971 - SC ORDER and Collector of Central Excise, Baroda v. Indian Petro Chemicals 1996 (12) TMI 66 - SC ORDER where the Full Bench and Division Bench of the Supreme Court respectively have categorically confirmed the position that the option to select the benefits provided under Notification is clearly within the realm of choice of an assessee. The appellant are entitled to the exemption under N/N. 20/98-CE. - the impugned orders are set aside - appeal allowed.

Summary

Issues:
1. Interpretation of Notification No. 20/98-CE and Notification No. 13/98-CE for duty exemption.
2. Calculation of deemed export value for entitlement to DTA sales.
3. Imposition of penalty under Rule 209 of the Central Excise Rules, 1944.

Analysis:
1. The case involved the appellant, a 100% EOU, clearing finished goods including rejects and wastes for DTA sales based on deemed exports value. The department contended that the appellant wrongly calculated DTA sale entitlement based on deemed exports, leading to a show cause notice for duty payment. The Tribunal previously remanded the matter for fresh decision. In the recent adjudication, the authority held that deemed export value counts for DTA sales entitlement but found the appellant did not pay duty as per Notification No. 13/98-CE, confirming a differential duty amount and penalty. The issue was whether the appellant qualified for duty exemption under Notification No. 20/98-CE or had to pay higher duty under Notification No. 13/98-CE.

2. The appellant argued they satisfied the conditions of Notification No. 20/98-CE, manufacturing finished goods from indigenous raw materials and falling under specified chapters. They claimed the benefit of the more favorable exemption Notification as per the Supreme Court judgment in HCL Limited Vs. CC. The department imposed a penalty under Rule 209, which the appellant contested, citing timely compliance with notification requirements and no confiscation orders. The Tribunal analyzed the relevant Notifications and case law to determine the appellant's entitlement to duty exemption.

3. The Tribunal found that Notification No. 20/98-CE covered the appellant's DTA clearances, meeting the conditions for duty exemption. Despite the department's view that Notification No. 13/98-CE applied, the Tribunal held that the appellant had the right to choose the more beneficial Notification. Citing Supreme Court judgments, the Tribunal emphasized the assessee's right to select the favorable notification. Consequently, the Tribunal set aside the impugned orders, allowing the appeals and granting consequential benefits to the appellant. The decision was pronounced in open court on 25.07.2024.