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TMI Blog2014 (12) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... oods. Section 3(1) uses the expression 'excise duty for the time being leviable on a like article if produced or manufactured in India'. The explanation explains the expression 'excise duty for the time being leviable on a like article if produced or manufactured in India' as to include the duty, which would be leviable on class or description of articles to which the imported article belongs, if such article is not produced or manufactured in India. However, the central concept remains the same, namely, the importer would have to pay CVD equivalent of the excise duty payable on a like article if produced or manufactured in India. In the present case, by virtue of the exemption notifications on a like article produced or manufactured in India there is no duty of excise payable or leviable is leviable. In other words, excise duty levied on such articles manufactured in India being nil, the CVD also, in terms of Section 3(1) of the Customs Tariff Act, would be nil. - The impugned order to the petition is quashed. On DTA clearance of SEZ unit, liability of countervailing duty under Section 30 of SEZ Act was imposed. This countervailing duty was equivalent to excise duty com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacture of the said goods by way of exemption notification, no CVD can be collected from the petitioner. The SEZ authorities, however, held a different view. The petitioner, therefore, applied to the said authority for refund of such duty already collected, and for exemption from payment of such duty on the clearances made, where such duty was not so collected. On such application, the said authority passed the impugned order dated 23rd January 2013 holding that the petitioner is not exempt from payment of the CVD. He relied on Section 5A of the Central Excise Act, 1944 to argue that any exemption from payment of excise duty to a local manufacturer would not apply to a SEZ unit. Interalia on such basis, the petitioner's application was dismissed. The petitioner, therefore, filed this petition and prayed for quashing of the said order. The petitioner has further prayed for a direction restraining the respondents from levying CVD on the goods cleared by the petitioner from its SEZ unit to DTA. 3. Learned Senior Counsel Shri Kamal Trivedi for the petitioner drew our attention to various statutory provisions, and argued that the petitioner being a SEZ unit, though would ordinar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding Free Trade and Warehousing Zone, and includes the existing Special Economic Zones. Chapter VI of the SEZ Act pertains to special fiscal provisions for SEZs. Section 26 contained in the said Chapter grants exemptions, drawbacks and concessions to every developer and entrepreneur, such as, exemption from payment of any customs duty, excise duty, etc. Section 30 pertains to domestic clearances by a SEZ unit and reads as under: 30. Domestic clearance by Units.-Subject to the conditions specified in the rules made by the Central Government in this behalf:- (a) any goods removed from a Special Economic Zone to the Domestic Tariff Area shall be chargeable to duties of customs including anti-dumping, countervailing and safeguard duties under the Customs Tariff Act, 1975 (51 of 1975), where applicable, as leviable on such goods when imported; and (b) the rate of duty and tariff valuation, if any, applicable to goods removed from a Special Economic Zone shall be at the rate and tariff valuation in force as on the date of such removal, and where such date is not ascertainable, on the date of payment of duty. 7. Section 51 of the SEZ Act provides that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imported alcoholic liquor belongs. Explanation.- In this sub-section, the expression the excise duty for the time being leviable on a like article if produced or manufactured in India means the excise duty for the time being in force which would be leviable on a like article if produced or manufactured in India or, if a like article is not so produced or manufactured, which would be leviable on the class or description of articles to which the imported article belongs, and where such duty is leviable at different rates, the highest duty. 10. It is not in dispute that by virtue of exemption Notification No. 3 of 2005-CE dated 24th February 2005, the product in question, namely, stone-wool insulation product was exempted from payment of whole of the excise duty payable under the Central Excise Act. This notification was replaced by Notification No. 12 of 2012-CE dated 17th March 2012, under which also the said total exemption continued. 11. In the erstwhile Central Excise Act, 1944, in Section 3 pertaining to levy and collection of duty, a proviso was added providing that the duties of excise, which shall be levied and collected on any excisable goods, which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red, - (i) in a free trade zone or a special economic zone and brought to any other place in India; or (ii) by a hundred per cent export-oriented undertaking and brought to any other place in India, shall be an amount equal to the aggregate of the duties of customs which would be leviable under the Customs Act, 1962 (52 of 1962) or any other law for the time being in force, on like goods produced or manufactured outside India if imported into India, and where the said duties of customs are chargeable by reference to their value; the value of such excisable goods shall, notwithstanding anything contained in any other provision of this Act, be determined in accordance with the provisions of the Customs Act, 1962 (52 of 1962) and the Customs Tariff Act, 1975 (51 of 1975). Section 5A Power to grant exemption from duty of excise. - (1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette exempt generally either absolutely or subject to such conditions (to be fulfilled before or after removal) as may be specified in the notification, excisable goods of any specified descripti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced or manufactured in special economic zones) specified in the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) which are produced or manufactured in India, as, and at the rates, set forth in the said Second Schedule. Provided that the duties of excise which shall be levied and collected on any excisable goods which are produced or manufactured, - (i) in a free trade zone and brought to any other place in India; or (ii) by a hundred per cent export-oriented undertaking and brought to any other place in India, shall be an amount equal to the aggregate of the duties of customs which would be leviable under the Customs Act, 1962 (52 of 1962) or any other law for the time being in force, on like goods produced or manufactured outside India if imported into India, and where the said duties of customs are chargeable by reference to their value; the value of such excisable goods shall, notwithstanding anything contained in any other provision of this Act, be determined in accordance with the provisions of the Customs Act, 1962 (52 of 1962) and the Customs Tariff Act, 1975 (51 of 1975). Section 5A Power to grant exemption from duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at different rates, the highest duty. 18. Section 30 of the SEZ Act only imposes a condition for a SEZ unit to clear the goods to a DTA. Such condition is payment of authorized duties including CVD as provided in the Customs Tariff Act as applicable and leviable on such goods when imported. By reference, therefore, the charging Section 3(1) of the Customs Tariff Act and such CVD would be leviable as if the goods cleared by SEZ unit to the DTA are in the nature of imports. If, therefore, by virtue of an exemption notification the whole of the excise duty payable as prescribed in the Central Excise Tariff Act is exempt for the local manufacturers, no CVD would be payable under Section 3(1) of the Customs Tariff Act on import of such goods. Section 3(1) uses the expression 'excise duty for the time being leviable on a like article if produced or manufactured in India'. The explanation explains the expression 'excise duty for the time being leviable on a like article if produced or manufactured in India' as to include the duty, which would be leviable on class or description of articles to which the imported article belongs, if such article is not produced or manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of the Customs Tariff Act, in view of the fact that such goods manufactured in India were not liable to any excise duty collection. The Division Bench of this Court relying on a decision in the case of Hyderabad Industries Ltd. (supra) upheld the challenge, and declared that the circular issued was not in accordance with law. 21. The only question now remains is whether a continued mention of Special Economic Zone in the proviso to sub-section (1) of Section 5A of the Central Excise Act, 1944 would alter these conclusions. The answer has to be in the negative for multiple reasons. We have noticed that before the Special Economic Zones Act was enacted, there were Special Economic Zones governed under the notifications issued by the Government of India. At such time, Section 3 of the Central Excise Act, 1944, as it stood then, did not exclude the goods manufactured in Special Economic Zone from payment of duty. The proviso to Section 3 required such units to pay on goods manufactured or produced in Special Economic Zone and brought to any other place in India, the aggregate of the duties of customs, which could be leviable under the Customs Act or any other law for the time bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of SEZ Act, by combined reading of Section 3(1) and Section 5A of the Central Excise Act, DTA clearance of SEZ units invited excise duty payable by local manufacturers on like goods when produced or manufactured in India. Any exemption to local manufacturer issued under Section 5A would not apply to such clearances of SEZ units to DTA, unless the notification itself provided so. After SEZ Act was enacted, this liability was done away with. Section 3(1) of the Central Excise Act was thus amended. On DTA clearance of SEZ unit, liability of countervailing duty under Section 30 of SEZ Act was imposed. This countervailing duty was equivalent to excise duty component to be paid by local manufacturer of like goods when produced or manufactured in India. Whether such liability would continue on SEZ units when local manufacturers were exempt has seen to be gathered from the language used in Section 30 of SEZ Act and not from proviso of subsection (1) of Section 5A of Central Excise Act. Even otherwise, Section 51 of SEZ Act gives overriding effect to the provisions of the Act. Thus, the entire legislative scheme has undergone a change by introduction of SEZ Act and the changes made in the ..... 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