1999 (4) TMI 369 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification 101/93-C.E. regarding duty rates for goods produced by a 100% Export Oriented Undertaking (EOU).
2. Applicability of Notification 19/88-C.E. to goods manufactured by a 100% EOU.
3. Effect of Tribunal's judgment in Chandigarh Zinc & Residue case on the interpretation of Notification 19/88-C.E.

Issue 1: Interpretation of Notification 101/93-C.E.:
The case involved a company recognized as a 100% EOU engaged in manufacturing iron ore concentrates and pellets for export and domestic clearance. The dispute arose over the correct rate of excise duty applicable to goods cleared for domestic tariff area (DTA). The Revenue contended for a higher duty rate than what the company had declared. The Assistant Collector initially accepted the company's plea based on Notification 19/88-C.E. The Revenue appealed, and the Commissioner (Appeals) ruled in favor of the Revenue. The Tribunal analyzed the provisions of Notification 101/93-C.E. and Notification 19/88-C.E. to determine the correct duty rate. The Tribunal ultimately held that the company's declared rate of 7.625% ad valorem was correct, setting aside the Commissioner's decision.

Issue 2: Applicability of Notification 19/88-C.E.:
The Commissioner (Appeals) contended that Notification 19/88-C.E. did not apply to goods produced by a 100% EOU. However, the Tribunal disagreed, emphasizing that the applicability of Notification 19/88-C.E. should be considered concerning the proviso to Notification 101/93-C.E., which applied to 100% EOUs. The Tribunal clarified that while Notification 19/88-C.E. was not directly applicable to 100% EOUs, its effect should be considered in the context of duty rates for goods produced in India outside of 100% EOUs. The Tribunal concluded that Notification 19/88-C.E. was indeed applicable to goods produced by the appellant in their 100% EOU.

Issue 3: Effect of Tribunal's judgment in Chandigarh Zinc & Residue case:
The Tribunal discussed the relevance of the Chandigarh Zinc & Residue case judgment in interpreting the benefit of Notification 19/88-C.E. The majority of the Tribunal members in the Chandigarh Zinc case had held that the benefit of the notification applied to imported goods. The appellant argued that goods produced in a 100% EOU should be treated as imported for duty calculation purposes, aligning with the Chandigarh Zinc judgment. The Tribunal agreed with this interpretation, stating that Notification 19/88-C.E. should be applied to the appellant's goods. Consequently, the correct duty rate was determined to be 7.625% ad valorem, in line with the appellant's classification, rather than the 10% rate proposed by the Revenue.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the duty rate of 7.625% ad valorem was correct for the goods produced by the 100% EOU. The Tribunal's decision was based on a comprehensive analysis of the relevant notifications and legal interpretations, emphasizing the application of Notification 19/88-C.E. and the impact of the Chandigarh Zinc & Residue case judgment on duty rate calculations for goods produced by EOUs.