2005 (7) TMI 404 - AT - Central Excise

Summary

Issues:
1. Eligibility of clearances made out of the EOU for benefit of Notifications 8/97, 13/98, and 2/95.
2. Denial of benefit based on the source of raw materials.
3. Application of Exim Policy provisions regarding deemed exports.
4. Remand for de novo decisions on duty demands and penalties.

Eligibility of Clearances under Notifications 8/97, 13/98, and 2/95:
The core issue in the appeals was the eligibility of clearances made by 100% EOU's for the benefit of Notifications 8/97, 13/98, and 2/95. The denial of these notifications without considering whether the raw material was Indian or imported was contested. The advocate argued that clearances would meet the criteria for exemption under the notifications if the raw material was Indian, even if received from other EOU's. The decision in Ginni International was relied upon to support the eligibility of deemed exports for DTA quota calculation.

Source of Raw Materials and Application of Exim Policy Provisions:
The source of raw materials from which the waste arose was crucial in determining eligibility for benefits under the notifications. The Tribunal emphasized the need to establish whether the raw material was Indian or imported to decide on the application of Notification 8/97, 13/98, or 2/95. The Exim Policy provisions regarding deemed exports under paras 9.9 and 9.10 were analyzed, highlighting the distinction between sales to DTA and supplies from EOU. Previous decisions like Sanju Silk Mills Ltd. and OPAL Fabrics were distinguished for not considering these essential stipulations.

Remand for De Novo Decisions on Duty Demands and Penalties:
The Tribunal ordered a remand for de novo decisions on duty demands, shortages, accounting, and penalties. It was emphasized that if the waste arose from Indian raw material, it would be entitled to the benefits of the relevant notifications. The matter was remitted for fresh decisions after hearing the appellants, keeping open the possibility of applying other notifications like 125/84 and considering demands under the Customs Act, 1962 for imported materials in EOU's under Section 65 manufacturing bonds.

In conclusion, the appeals were allowed based on the above terms, and the Tribunal pronounced a remand for both sides to proceed with de novo proceedings on the issues of duty demands, shortages, accounting, and penalties.