2001 (9) TMI 391 - AT - Central Excise

Summary

Issues:
1. Eligibility for exemption under Notification No. 5/98-C.E. for a 100% Export Oriented Undertaking (EOU) regarding the manufacture and clearance of Plastic Agglomerate (Recycled) to the Domestic Tariff Area (DTA).
2. Application of proviso to Section 3(1) of the Central Excise Act and Notification No. 2/95-C.E. on goods manufactured in a 100% EOU.
3. Invocation of extended period of limitation under Section 11A(1) of the Central Excise Act for demanding Additional Duty of Customs (CVD).
4. Interpretation of conditions for availing exemption under the Notification and imposition of penalties under Section 11AC of the Act and Central Excise Rules.

Analysis:
1. The case involved a dispute where a 100% EOU was accused of wrongly availing exemption under Notification No. 5/98-C.E. for manufacturing and clearing Plastic Agglomerate (Recycled) to the DTA without payment of proper duty. The department contended that re-processing of plastic waste and scrap did not meet the condition of being "re-processed in India" for exemption eligibility, invoking the proviso to Section 3(1) of the Central Excise Act.
2. The Revenue argued that goods manufactured in a 100% EOU were deemed to be produced outside India as per legal provisions, making the respondents liable for CVD on the goods cleared to the DTA. The department also alleged deliberate suppression of facts by the respondents to evade duty payment, justifying the invocation of the extended period of limitation for demanding differential duty.
3. The respondents, represented by an advocate, relied on previous tribunal and court decisions to support their claim. They highlighted that similar demands were deemed unsustainable in previous cases and that the issue was covered by the Tribunal's earlier decision in favor of the respondents.
4. The Tribunal observed that the Commissioner (Appeals) did not provide a clear reasoning for setting aside the demand as time-barred, leading to the conclusion that the impugned order was not detailed. However, based on previous decisions and the conditions satisfied by the respondents, the Tribunal upheld the respondents' eligibility for exemption under the Notification, emphasizing that the conditions were met, and the exemption was applicable to 100% EOUs without discrimination.

In conclusion, the Tribunal sustained the impugned order, rejecting the Revenue's appeal based on the findings that the respondents satisfied the conditions for availing the exemption under the Notification, and there was no basis for denying the benefit to a 100% EOU manufacturing Plastic Agglomerate (Recycled) in India and clearing it to the DTA.