2019 (1) TMI 62 - AT - Central Excise

100% EOU - refund of differential duty paid - revision of assessable value by including the Basic Customs Duty of 10% in the value - Section 14 of the Customs Act, 1962 - scope of SCN - Held that - The impugned order does not specifically states as to why the value of Basic Customs Duty needs to be included in the assessable value. It merely holds that the appellant has not included the element of Basic Customs Duty in the assessable value and therefore the same may be included. It is obvious that for the purpose of comparison in terms of said proviso to section 3 of CEA, the duty leviability on like goods produced or manufactured outside EOU should be considered. In these circumstances, Section 14 of Customs Act, 1962 or proviso to Section 3 of Central Excise Act, 1944 have no relevance whatsoever. Therefore, there is no need to include the element of Basic Customs Duty in the assessable value for the purpose of arriving at the value of similar goods manufactured outside EOU. The impugned order has not dealt with the other issues like unjust-enrichment etc., the impugned order is set-aside and the matter is remanded to the original adjudicating authority to examine the issue in terms of Section 11B - appeal allowed by way of remand.

Summary

Issues:
- Rejection of refund claim by lower authorities
- Inclusion of Basic Customs Duty in the assessable value for duty calculation
- Interpretation of Notification No. 23/2003-CE regarding duty exemption for EOU

Analysis:
1. Rejection of Refund Claim: The appellant, a 100% EOU, filed a refund claim after paying duty at a higher rate due to a discrepancy pointed out by the CERA audit team. The claim was rejected by lower authorities, leading to the appeal. The counsel argued that no specific law required including Basic Customs Duty in the assessable value for duty calculation.

2. Inclusion of Basic Customs Duty: The impugned order cited Section 14 of the Customs Act, 1962 to justify including Basic Customs Duty in the assessable value. However, the appellant contended that the comparison for duty calculation should be made with goods produced outside EOU, not within EOU. The tribunal agreed that for comparison purposes, duty levied on goods produced outside EOU should be considered, rendering the relevance of Section 14 of the Customs Act and proviso to Section 3 of the Central Excise Act irrelevant.

3. Interpretation of Notification No. 23/2003-CE: The tribunal observed that the proviso in the notification compares duty levied on similar goods manufactured in DTA to those manufactured in EOU. It clarified that duty levied by EOU under the notification should not be less than duty on goods produced outside DTA. Consequently, the tribunal found no justification for including Basic Customs Duty in the assessable value for determining duty on goods produced outside EOU.

4. Judgment: The tribunal did not find merit in the impugned order and set it aside. However, it noted that other issues like unjust enrichment were not addressed. Thus, the matter was remanded to the original adjudicating authority for further examination in accordance with Section 11B. The appeal was allowed by way of remand, with the order pronounced on 02.01.2019.