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TMI Blog2011 (4) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... 011-EX(PB) - Dated:- 8-4-2011 - R.M.S. Khandeparkar, Shri Rakesh Kumar, JJ. REPRESENTED BY: Shri B.L. Narasimhan, Advocate, for the Appellant. Shri V. Chaudhary, SDR, for the Respondent. [Order per : Justice R.M.S. Khandeparkar, President (Oral) (for the Bench). Heard at length the learned advocate for the appellants and the DR for the respondents in terms of order passed on 18-2-2011 in Stay application No. 2107/2010. We have also perused the written submissions filed on behalf of the appellants. 2. The present appeal arises from order passed by the Commissioner (Appeals) Indore on 31-3-2010. By the impugned order the Commissioner (Appeals) rejected the appeal filed by the applicants against order-in passed by the adjudicating authority. The Assistant Commissioner, Indore by his order dated 13-11-2009 had confirmed the demand of duty to the tune of Rs. 4,99,705/- with interest and imposed penalty of Rs. 50,000/- against the appellants. 3. The appellants are the manufacturers of cotton yarn classifiable under Chapter heading 5205 of the Central Excise Tariff Act. Previously the appellants were 100% EOU. The appellants applied to the Development Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 23/2003-C.E., dated 31-3-2003, and therefore the authorities below were not justified in confirming the demand. He further submitted that the department wrongly denied the benefit of Notification No. 23/2003-C.E., dated 31-3-2003 and calculated the duty liability in terms of proviso to Section 3(1) of Central Excise Act, 1944. According to the learned advocate, the proviso to Section 3(1) of the said Act could be attracted only in case of clearance of goods to DTA by an EOU and not otherwise. Since the appellants had already ceased to be EOU at the time of bringing the goods in DTA unit, the proviso to Section 3(1) of the said Act was not attracted and law in that regard is well settled by the decision of the Apex Court in the matter of Siv Industries Ltd. v. CCE and Customs reported m 2000 (117) E.L.T. 281 (S.C.). He further submitted that at the time of debonding appellants did pay the excise duty as per S. No. 3 of the Notification No. 23/2003 and not as per S. No. 2 of the said Notification. According to the appellants S. No. 2 of the said Notification has no application. He further submitted that the decision of the Larger Bench of the Tribunal in the matter of Himalaya inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment right from the time of issuance of show cause notice that the amount of duty demanded is equivalent to the difference in the duty payable and paid at the time of debonding from EOU to DTA unit. The show cause notice clearly stated that at the time of debonding, the noticee had paid the central excise duty at the concessional rate on the basis of Notification No. 23/03-C.E., dated 31-3-03 on the finished goods available in the stock on 31-3-04. It was further stated that it is observed, that the provisions made in sub-paragraph (a), (d), (e) and (g) of paragraph 6.8 of the foreign trade policy, are for DTA sale by 100% EOU and not for the purpose of discharging the duty of Central Excise at the time of debonding of the unit. Further, it was brought to the notice of the appellants that the noticee has thus, followed the provisions of Section 3(1) inasumuch as they had not discharged the duty as stipulated for such purposes, it is obligatory on the part of the noticee to abide by the Rules and Notification laid therein for the purpose of debonding . It was also stated that the benefit of Notification No. 23/2003-C.E. is restricted to sale allowed to be sold stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from DTA unit and not from EOU unit. The contention of the applicant as above is totally devoid of substance. Once it is not in dispute that the duty liability is on account of debonding and on account of clearance of goods at the time of such debonding from EOU, and the statutory provision clearly require payment of dues at the stage of debonding, the question of availing benefits of Notification or provision of law applicable to the clearance of goods from normal DTA units cannot apply to the goods in respect of which the duty is payable on account of debonding from EOU. 8. It is undisputed fact that under EOU scheme manufacturer enjoys various benefits and concessions. Consequent to debonding manufacturer cannot claim the same benefits. Therefore, goods which were manufactured while the unit was enjoying the benefit of EOU scheme on ceasation of being EOU has obviously to pay the normal duty payable for exporting the goods in the absence of applicability of the said scheme, and that is what had been held by Larger Bench in Jaipur Golden Transport Co. Pvt. Ltd. cited supra. It was clearly ruled therein as under:- We find that the wordings of proviso to Section 3(1) of the Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended interpretation that it is the duty of the court to give a harmonious construction of a statute and that such a construction shall suppress the mischief and advance the remedy. Further as observed by the Supreme Court in the case of Ispat Industries it is nowhere laid down by our constitution or any other law that only Maxwell s Principles of Interpretation can be used by the court. We can use any system of interpretation which helps us solve the difficulties like the mimansa of principle of interpretation which lay down that when there is the conflict between the purpose and the material, purpose is to prevail because in the absence of the prescribed material a substitute can be used, for the material is subordinate to the purpose. If a subordinate idea clashes with the principal idea, the former must be adjusted to the latter or must be disregarded altogether. Further when there is a conflict between the use and the substance, greater regard should be paid to the use. Following these principles, we find that the purpose all along has been to treat 100% FOUs differently from domestic units other than 100% EOU and therefore we hold that so long an hundred per cent EOU continu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, the Larger Benches have clearly distinguished the decision of the Apex Court in Siv Industries Ltd. case. Indeed the issue for consideration before the Apex Court in Siv Industries was relating to the duty liability after debonding and not at the time of debonding and this is apparent from the paragraph 4 of the said decision wherein it is recorded that Once the debonding of the unit is permitted, finished goods earlier manufactured in the 100% EOU could be cleared for Domestic Tariff Area (DTA) on levy of duty of Central Excise. The dispute is at what rate this duty is to be levied. Apparently therefore the decision is not relevant to a situation arising at the time of debonding of the unit. 11. In the facts of the case in hand, we are concerned at the stage of debonding and provisions of the scheme and in particular clause 6.18 of Chapter 6 of the Foreign Trade Policy as was in force at the relevant time, sub-clause (e) specifically provided that Units proposing to exit from EOU scheme should obtain permission for in principle approval and submit details of imports and exports made to the Central Excise/Customs Authority. After such verification, the said authority wil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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