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2017 (8) TMI 63 - AT - Central Excise100% EOU - DTA clearance - Revenue is of the view that the appellant did not avail any cenvat credit on inputs, therefore, they did not fulfil condition No. (iii) of the N/N. 23/2003-CE. Therefore, they are required to pay duty in terms of serial number 4 of the N/N. 23/2003-CE dated 31.03.2003, attracting the Central Excise Duty at the rate of 30% of the Customs Duty plus cess which is applicable to similar goods when imported - Held that - the identical issue has been dealt by this Tribunal in the case of M/s Cheema Spintex Ltd. 100% EOU 2017 (4) TMI 748 - CESTAT CHANDIGARH , where it was held that the goods for which exemption is claimed when manufactured and cleared by unit other than EOU should not be wholly exempted from the excise duty or should not be chargeable to nil rate of duty. It is evident that the fact of the respondents not availing cenvat credit is not a relevant consideration in deciding the question whether they comply with N/N. 23/2003-CE - this Tribunal held that the assessee is not required to pay the differential duty. The appellant is not required to pay any duty in terms of N/N. 23/2003-CE dated 31.03.2003 read with N/N. 29/2004-CE dated 09.07.2004 - appeal allowed - decided in favor of appellant.
Issues:
Interpretation of conditions for availing exemption under Notification No. 23/2003-CE for 100% EOU engaged in manufacturing cotton yarn. Analysis: The appellant, a 100% EOU manufacturing cotton yarn, paid duty on Domestic Tariff Area clearance at 4% plus Education Cess under Notification 23/2003-CE. The Revenue contended that as the appellant did not avail cenvat credit on inputs, they did not fulfill condition (iii) of the Notification. Consequently, a show cause notice was issued, and differential duty was demanded along with interest and penalty. The Tribunal analyzed a similar case involving M/s Cheema Spintex Ltd. and held that the condition regarding goods not being wholly exempt from excise duty or chargeable to nil rate of duty under the Notification should not be based on the appellant's availing of cenvat credit. The Tribunal further cited the case of Hanil Era Textiles Ltd., emphasizing the conditions for applying Sr. No. 3 or 4 of the Notification. It was concluded that the appellant was entitled to clearances in DTA after paying duty at the prescribed rate under the Notification. Therefore, the Tribunal set aside the demand for differential duty, ruling in favor of the appellant. Conclusion: The Tribunal's decision in this case clarifies that the condition for availing exemption under Notification No. 23/2003-CE for 100% EOU manufacturing units should not be linked to the availing of cenvat credit on inputs. The judgment underscores the importance of analyzing the specific conditions laid out in the Notification to determine the applicability of duty rates for goods cleared in the Domestic Tariff Area. The ruling provides guidance on interpreting and applying the provisions of the Notification to ensure compliance with excise duty regulations for EOU units engaged in manufacturing activities.
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