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TMI Blog2013 (6) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, Explanation to Section 3(1) of the Customs Tariff Act clearly mandates that where excise duty is leviable at different rates, the highest duty is to be taken. Notification No. 30/2004-C.E. is not applicable to the imported goods as conditions prescribed therein cannot be satisfied on the goods produced or manufactured outside and imported into India. Even for the sake of argument, if it is assumed that it is applicable, in view of Explanation to Section 3(1) of the Customs Tariff Act, 1973 as also Explanation 1 to Section 3(1) of the Central Excise Act, 1944 (which is specific to 100% Export Oriented Units), we have no hesitation in holding that rates prescribed under Notification No. 29/2004-C.E., which are higher than prescribed under Notification No. 30/2004-C.E. will be applicable. We accordingly hold that Additional duty of Customs will be computed as per Notification No. 29/2004-C.E. and Notification No. 30/2004-C.E. For the units (other than 100% EOU), two options are available viz. pay 8/4% excise duty (without any condition) or NIL rate of excise duty provided no Cenvat credit is taken on the inputs or capital goods used in the manufacturing process. Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Blended Yarn of Acrylic, Viscose and Polyester. For manufacture of said yarns, they are importing as well procuring locally, fibers of different types. As far as cotton yarn is concerned, it is their claim that cotton fibres is entirely procured locally. Appellant has been exporting the final products and part of the production was being cleared into Domestic Tariff Area (DTA) as per the provisions of Export-Import Policy. Such clearances to DTA are on payment of excise duty. Dispute is relating to the applicable rate of duty relating to such clearances. Appellants were issued four show cause notices covering the period Sept., 2005 to Nov., 2008. As the issue involved/type of yarns is varying in the four show cause notices, the four show cause notices/corresponding Order-in-Originals/Appeals are briefly enumerated below : 3.1 Appeal No. E/1092/2007-Mum. :- This appeal is against Order-in-Original No. 06/MS/(06)/COMMR/RGD/07-08, dated 26-4-2007 in respect of show cause notice F. No. V/ADJ/(SCN)15-110/RGD/06, dated 9-10-2006 involving period from September, 2005 to Feb., 2006. During this period, appellant cleared in DTA (i) Cotton Yarn (52.05) by paying duty vide Sr. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (55.05). Adjudicating authority upheld the entire demand. 3.3 E/1075/2008-Mum. :- This appeal is against Order-in-Original No. 09/SLM(09)COMMR/RGD/08-09, dated 31-7-2008 in respect of show cause notice F. No. V/Adj(SCN)15-03/Rgd/07-08, dated 1-5-2007 involving period from April 2006 to November 2006. The said demand notice covers clearance in DTA in respect of (i) Cotton Yarn (52.05) without payment of duty claiming to be covered by Sr. No. 3 of Notification No. 23/2003-C.E. read with Notification No. 30/2004-C.E. Demand notice proposed Sr. No. 4 of Notification No. 23/2003-C.E., which is 30% of Customs duty. Here Basic Customs Duty taken was 12.5% and CVD 4% (as per Notification No. 29/2004-C.E.). Adjudicating authority upheld the demand and held that in view of proviso to Section 5A(1) of Central Excise Act, 1944 benefit of Notification No. 30/2004-C.E. cannot be extended. (ii) Cotton Waste (52.02) without payment of duty claiming to be covered by Sr. No. 3 of 23/2003-C.E. and excise duty being NIL as per Tariff rate. Demand notice proposed Sr. No. 4 of Notification No. 23/2003-C.E. which is 30% of Customs duty. Here basic Customs duty was taken as 15% and CVD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lways blended polyester fibre and cotton fibre only. The Appellants have never blended acrylic fibre with other fibre to make blended yarn. In other words, the blended yarn is also made wholly from indigenous procured goods and therefore eligible for exemption. (iv) In any case, while calculating demand under Serial No. 2 of the EOU Notification, benefit of Notification No. 30/2004-C.E. (in case of BED) Notification No. 31/2004-C.E. (in case of AED in appeal No. E/1344/10) is available. Proviso to Section 5A(1) is not applicable under such circumstances. In support of this contention following case laws were mentioned (i) Ratangiri Textiles v. CCE [2003 (161) E.L.T. 975 (T)] (ii) CCE v. Shanta Biotechnics [2010 (259) E.L.T. 447 (T)] (iii) CCE v. Modern Terry Towel - Final Order No. A/1985/2008-WZB/AHD, dated 4-9-2008 by Hon ble CESTAT, Ahmedabad (iv) CC v. Ashima Dyecot [2011 (267) E.L.T. 122 (T)] (v) Demand of duty on cotton yarn cotton waste (in appeal No. E/1075/2008) is incorrect. Order-in-Original in Appeal No. E/1092/2007 has specifically dropped the demand on cotton yarn which has not been challenged by the Revenue. Such demand has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ext of 100% EOU. 7.1 Preamble to the Central Excise Act, 1944 (hereinafter referred as said Act) states, - whereas it is expedient to consolidate and amend the law relating to Central duties of excise on goods manufactured or produced in certain part of India . (emphasis supplied) 7.2 Section 1(2) of the said Act state that it extends to the whole of India. 7.3 Section 3 which is the changing Section for levy of duty reads as under :- SECTION 3. Duties specified in First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 to be levied. - (1) There shall be levied and collected in such manner as may be prescribed, - (a) a duty of excise to be called the Central Value Added Tax (Cenvat)] on all excisable goods (excluding goods produced or manufactured in special economic zones) which are produced or manufactured in India as, and at the rates, set forth in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); (b) a special duty of excise, in addition to the duty of excise specified in clause (a) above, on excisable goods (excluding goods produced or manufactured in special economic zones) speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods produced or manufactured in special economic zone are not liable to excise duty under Section 3 of the Central Excise Act. 7.4.1 Clause (b) of Section 3(1) provides for special duty of excise, in addition to Cenvat, on excisable goods specified in the second schedule to the Central Excise Tariff Act, 1985. This clause is again applicable to whole of the country other than special economic zone. 7.4.2 Proviso to Section 3(1) state that duties of excise which shall be levied and collected on any excisable goods which are produced or manufactured by a hundred per cent export-oriented undertakings and brought to any other place in India shall be an amount equal to the aggregate of duties of customs which would be leviable under the Customs Act, 1962 or any other law for the time being in force, on like goods produced or manufactured outside India if imported into India and when the said duties of customs are chargeable by reference to their value, the value of such excisable goods shall be determined in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975. 7.5 To put above, in brief, (i) Excisable goods produced or manufactured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia. Thus the excise duty which is equal to aggregate of Customs duties in respect of 100% EOU would be more than the excise duty leviable on like goods produced by other manufacturing unit located in the country. The reason is that 100% EOU gets lot of advantage relating to duty-free import or duty-free local procurement of raw materials, consumables, capital goods as also under Income Tax Laws compared to other units located in the country. Moreover, 100% EOU are expected to mainly export. We also note that Explanation 1 to the proviso to Section 3(1) of the said Act specifically provides that in respect of goods where different rates are prescribed, in respect of any duty of customs, highest would be taken. Thus if basic customs duty or CVD are prescribed at different rates, highest of these would be taken. 8. Another important provisions relevant in the present dispute is Section 5A which empowers the Central Government to grant exemption. The relevant sub-sections for the present case reads as under : 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ured by a 100% EOU and brought to any place of India. 10. From the above provisions, following emerges (a) Goods produced or manufactured in a 100% EOU and cleared to any place in India are chargeable to excise duty. (b) The said excise duty applicable to 100% EOU is different than applicable to other manufacturing units (who are required to pay duty as specified in First and Second Schedule to the Central Excise Tariff Act, 1985) (c) The said excise duty applicable to 100% EOU is 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. (d) Where any duty of Customs leviable for the time being in force is leviable at different rates, then such duty for purpose of 100% EOU will be deemed to be leviable of the highest rate. (e) Exemption notification exempting whole or part of excise duty issued under Section 5A would not be applicable to excisable goods produced by 100% EOU unless specifically provided in such notification. (f) There is no bar on applyi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Central Excise Act as specified in the corresponding entry in column (4) of the said Table. TABLE Sr. No. Chapter or heading No. or sub-heading No. Description of Goods Amount of Duty Condi-tions (1) (2) (3) (4) (5) 2. Any Chapter All goods In excess of the amount equal to fifty per cent. of the duty leviable under Section 3 of the Central Excise Act : Provided that the duty payable in accordance with this Notification in respect of the said goods shall not be less than the duty of excise 2 leviable on the like goods produced or manufactured outside the export oriented undertaking, Electronic Hardware Technology Park unit or Software Technology Park unit, which is specified in the said Schedule read with any other relevant notification issued under sub-section (1) of section 5A of the Central Excise Act : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In excess of amount equal to 30% of the duty payable under section 3 of the Central Excise Act, 1944. Illustration .- Assuming, product X has the value of ₹ 100 under section 14 of the Customs Act, 1962 and is chargeable to basic custom duty of 25% ad valorem , special additional duty of 4% ad valorem and not chargeable to additional duty. The computation of duty required to be paid would be as follows : Basic Customs duty = ₹ 25/- Value for the purpose of special additional duty if leviable = ₹ 100/- + ₹ 25/- = ₹ 125/- Special Additional duty if leviable = 4% of ₹ 125/- = ₹ 5.0/- Total duty payable but for this exemption = ₹ 25/- + ₹ 5.00/- = ₹ 30.00/- Thirty per cent. of the aggregates of the duties of customs = 30% of ₹ 30.00/- = 9.00/- Duty required to be paid in accordance with this Notification = ₹ 9.00/- 4 No. Conditions 2. If,- (i) the goods are cleared into Domestic Tariff A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tured wholly from the raw materials produced or manufactured in India; (ii) the goods are cleared into Domestic Tariff Area in accordance with sub-paragraphs (a), (b), (d) and (h) of Paragraph 6.8 of the Export and Import Policy; and (iii) such finished goods, if manufactured and cleared by the unit other than export oriented undertaking are not wholly exempt from duties of Excise or are not chargeable to NIL rate of duty. 4. If,- (i) the goods are produced or manufactured wholly from the raw materials produced or manufactured in India; (ii) such finished goods are cleared into Domestic Tariff Area in accordance with sub-paragraphs (a), (b), (d) and (h) of Paragraph 6.8 of the Export and Import Policy; and (iii) the goods, if manufactured and cleared by the unit other than export oriented undertaking are wholly exempt from duties of Excise or are chargeable to NIL rate of duty. 11.2 A reading of opening para clearly specifies that the notification is issued under Section 5A of the said Act and is applicable to the excisable goods produced or manufactured in an export oriented undertaking a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 55.11, 55.12, 55.13, 55.14 All goods 8% Notification No. 30/2004-Central Excise G.S.R. (E) - In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944) read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 07/2003-Central Excise, dated the 1st March 2003, published in the Gazette of India vide No. G.S.R. 137(E), dated 1st March 2003, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the excisable goods of the description specified in column (3) of the Table below and falling within the chapter, heading No. or sub-heading No. of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the Central Excise Tariff Act), specified in the corresponding entry in column (2) of the said Table, from whole of the duty of excise leviable thereon under the said Central Excise Act : Provided tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time being in force, on like goods produced or manufactured outside India if imported into India. 11.6 However, while computing the Customs duty, basic Customs duty is to be seen from Customs Tariff Act read with exemption notification of Customs duty. However, Additional duty of Customs or CVD is leviable as per Section 3(1) of the Customs Tariff Act, 1975. The said sub-section reads as under :- [Section 3. Levy of additional duty equal to excise duty, sales tax, local taxes and other charges. (1) Any article which is imported into India shall, in addition, be liable to a duty (hereafter in this section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that percentage of the value of the imported article. Provided 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purposes of this proviso, be deemed to be leviable at the highest of those rates. We have no hesitation in holding that Notification No. 30/2004-C.E. is not applicable to the imported goods as conditions prescribed therein cannot be satisfied on the goods produced or manufactured outside and imported into India. Even for the sake of argument, if it is assumed that it is applicable, in view of Explanation to Section 3(1) of the Customs Tariff Act, 1973 as also Explanation 1 to Section 3(1) of the Central Excise Act, 1944 (which is specific to 100% Export Oriented Units), we have no hesitation in holding that rates prescribed under Notification No. 29/2004-C.E., which are higher than prescribed under Notification No. 30/2004-C.E. will be applicable. We accordingly hold that Additional duty of Customs will be computed as per Notification No. 29/2004-C.E. and Notification No. 30/2004-C.E. 12. Another notification, which is matter of dispute in E/1344/2010 is 31/2004. Revenue has demanded Additional duties of Excise leviable under Additional Duties of Excise (Textiles Textile Articles) Act, 1978 denying benefit of Notification No. 31/2004-C.E. This notification reads as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n most of the cases, Revenue has held that Sr. No. 2 is the applicable Sr. No., while appellants have mainly claimed Sr. No. 4 of the said notification. In some cases, Sr. No. 3 is also involved. All the goods in this case are covered by all the Sr. Nos. viz. 2, 3 4. However conditions for availing the benefit are different. Sr. No. 2 provides that excise duty leviable will be 50% i.e. 50% of the aggregate duties of Customs. This is of course subject to specified condition (which is applicable for Sr. Nos. 3 and 4 also) which is not matter of dispute. As far as Sr. Nos. 3 and 4, both are applicable only when the goods are produced or manufactured wholly from the raw materials produced or manufactured in India. Sr. No. 3 is applicable if such goods manufactured by a unit (other than 100% EOU) are chargeable to some duty (other than NIL rate or total exemption) while Sr. No. 4 is applicable if such goods are chargeable to NIL rate or are totally exempt. Thus for applying Sr. No. 3 or 4, two conditions are to be determined viz. (1) whether the goods are produced or manufactured wholly from the raw materials produced or manufactured in India, and (2) whether the goods are chargeable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held that the inputs contained in the imported commodity are shown to be not chargeable to duty of excise in India, there is no question of an Indian manufacturer of such commodity availing Cenvat credit and therefore there is no question of levy of CVD. In the present case, no such thing have been shown. On the contrary, inputs are chargeable to duty and hence Cenvat credit can be taken. 16. We find that whether or not goods are manufactured or produced from the raw materials produced or manufactured in India is under dispute. This is purely a question of fact. Appellant s contention is that in certain period raw material purchased from indigenous sources is more than the clearance of final products. In our view, on this basis, condition relating to goods being manufactured out of raw materials being manufactured or produced in India cannot be satisfied. Appellant has to prove from records and other evidences that goods cleared were manufactured from indigenous raw material. Revenue has also argued that appellant has used same machinery and they do not have separate line for goods to be exported and that cleared to domestic buyers. There is no such requirement under the law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to have been filed before us. These therefore, appears to have reached finality. Appellant has contended that same benefit should be extended for other period. We reject this plea, whatever is not as per law, cannot be extended for other period, just because Revenue has not filed appeal/demanded duty. 18. We, accordingly, order :- (i) For determining excise duty, which is an amount equal to the aggregate of the duties of Customs - Additional Duty of Customs (CVD) is to be calculated as per rates specified in Notification No. 29/2004-C.E. (or any other notification prescribing duty unconditionally) and not as per Notification No. 30/2004-C.E.; (ii) Benefit of Notification No. 31/2004-C.E. will be available to the appellant for computing Additional Duties of Customs; (iii) Benefit of Sr. No. 3 of Notification No. 23/2003-C.E. would be available only if appellant can satisfy that goods cleared in DTA were out of raw materials produced or manufactured in India. For this purpose, as indicated in para 16.1 above, appellant would submit the claims supported by his records to the original authority within four weeks from the date of receipt of this order. The origin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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