2018 (10) TMI 12 - AT - Central Excise

EOU - Levy of AED (GSI) and AED (T TA) - N/N. 23/2003-CE dated 31.03.2003 - whether AED (GSI) and AED (T TA) are leviable on the goods cleared by the appellant during the relevant periods as per the show cause notice? - Held that - Notification No.23/2003-CE exempts the appellant from payment of Central Excise duty leviable under Sec.3 of the Central Exise Act. Sl.No.5 of this notification also exempts the goods from the AED (GSI). There is a separate exemption Notification No.24/2003 which exempts the goods cleared from EOUs from AED (GSI) as well as AED (T TA) but it does not apply to DTA clearances. When the goods are manufatured by EOU, they are treated as if they are manufactured outside India and when they are cleared to domestic tariff area, an excise duty is levied equivalent to the Customs Duty leviable on similar goods. This includes both the Basic Customs Duty as well as CVD which is equal to all the excise duties leviable on similar products. As far as the CVD component is concerned, the question as to whether it should be calculated after taking into account the excise exemption notifications, if any, available for the goods or otherwise is the question. During the relevant period Notification No.31/2004 and Notification No.32/2004 have exempted all goods from AED (T TA) and AED (GSI) - when similar goods are imported into India or they are cleared by an EOU to DTA there will be no CVD on the components of AED (T TA) and AED (GSI) in view of the aforesaid exemptions. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of Notification No.23/2003 regarding duty exemptions for Export Oriented Units (EOUs).
2. Exemption applicability under Notification No.24/2003 for AED (GSI) and AED (T & TA).
3. Impact of various notifications on Additional Excise Duty (AED) for goods under heading 5208.
4. Calculation of Countervailing Duty (CVD) considering exemption notifications.

Analysis:

1. The appeals involved the interpretation of Notification No.23/2003, which exempted grey cotton fabric from duty under certain conditions. The appellant, an Export Oriented Unit (EOU), argued that they correctly paid 8% Basic Excise Duty (BED) and 4% Additional Excise Duty (GSI) as per the notification's apportionment requirement.

2. Notification No.24/2003 exempted excisable goods from duty under specific sections but did not apply to Domestic Tariff Area (DTA) clearances. The appellant contended that previous notifications also exempted goods under heading 5208 from AED (T & TA), supporting their case for exemption.

3. Additional notifications like No.18/1996 and No.32/2004 further impacted the applicability of AED (T & TA) and AED (GSI) on goods under heading 5208. The appellant argued that these exemptions should be considered in calculating the duty liabilities, making the demands unsustainable.

4. The issue of calculating Countervailing Duty (CVD) for goods cleared by EOUs to DTA was crucial. The tribunal referred to relevant case laws and circulars to determine that exemptions under specific notifications must be considered while calculating CVD. Notifications No.31/2004 and No.32/2004 exempted goods from AED (T & TA) and AED (GSI), affecting the duty calculation methodology.

In conclusion, the tribunal allowed the appeals, setting aside the demands and orders against the appellant. The judgment emphasized the importance of considering exemption notifications in determining duty liabilities for goods cleared by EOUs to DTA, particularly in the context of CVD calculations.