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TMI Blog2008 (2) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the manufacture of Aluminum Wheels, which are excisable. Initially, they had operated as an EOU Unit in Visakhapatnam Export Processing Zone. However, consequent to the change of Export Processing Zone(EPZ) scheme into a Special Economic Zone(SEZ) scheme, the assessees had opted to operate as a 100% EOU from 31.01.2003 onwards and obtained a merged LOP dated 24.01.2003. They have been procuring both imported and indigenous goods without payment of duty under exemption Notifications 52/2003-CE dated 31.03.2003 and 22/2003-Cus dated 31.03.2003 respectively. They have been clearing their finished goods by way of export and also clearances in the Domestic Tariff Area on payment of appropriate duties under the exemption Notification No. 2/95-CE dated 04.01.1995 and 23/2003-CE dated 31.03.2003. As far as the present appeals are concerned, the issue relates to the interpretation of Notification No. 52/2003-Cus dated 31.03.2003 in respect of the goods viz. Aluminum Dross and Scrap. 2. The principal raw material used for manufacture of Aluminium Alloy Wheels is "Aluminium Ingots". These Ingots are melted in the Induction furnace. The molten metal goes for degassing for removal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 7,50,754 Penalty Rs. 7,50,000/- July 2004 to Feb. 2005 and March 2005 to April 2005 M/s. Synergies Castings Limited Vs. CCE C, Visakhapatnam-I --do-- Duty: Rs. 17,12,119/-and Rs. 20.96,365/- Penalty Rs. 7,50,000/- May 2005 to September 2005 and October 2005 to March 2006 CC CE, Visakhapatnam-IVs. M/s. Synergy Dooray Automotive Lt No. 09/2005-06 (R.P) Dt: 29.07.2005 passed by CCE C, Vizag-I Duty: Rs. 82,91,704/- Penalty Rs. 29,23,263/- January, 2003 to June, 2004 4. We heard both sides. In terms of the Customs Notification No. 52/2003, a 100% EOU can import raw materials, Capital Goods, consumables, etc. for the manufacture of final product, which are to be exported. That is the basic intention of the scheme. A 100% EOU can also procure duty free goods from the indigenous market for the purpose of using them in the manufacture of final products, which are to be exported. In this case, the final product is Aluminium Wheels. There is no dispute that all the Ingots, which are imported, are used in the manufacture of Aluminium Wheels and these wheels have been exported. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication whatsoever where the finished goods are excisable. In this case, the finished goods of the assessees or 100% EOU, are Aluminium Wheels. They are excisable and they are exported and where they are cleared to DTA, they would be paying duty in terms of para 3 main section after taking the permission of the Development Commissioner. Therefore in a case like this, where the finished product is Aluminium Wheels and which is excisable, the proviso cannot be invoked at all for any reason. In order to understand the departments contention, we are reproducing the entire para 3 of the said Notification. "3. Notwithstanding anything contained in this notification, the exemption herewith shall also apply to goods which on importation into India or procurement, are used for the purpose of manufacture of finished goods or services and such finished goods and services (including by-products, rejects, waste and scrap arising in the course of production, manufacture, processing or packaging of such goods) even if not exported, are allowed to be sold in Domestic Tariff Area in accordance with the Foreign Trade Policy and subject to such other limitations and conditions as may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eared to DTA, the legislature thought it fit to demand the Customs duty on the raw materials, which had gone into the finished goods, which includes rejects, waste, scrap, remnants and certain by products. Therefore, in order to provide for such a situation, where the finished goods are non-excisable, there is a provision for demand of Customs Duty on the raw materials, which had gone into such finished products. Where the finished products are excisable, this proviso will not come into being. The Commissioner, while passing the impugned order against the assessees, has not appreciated or understood the Notification in its totality. She had taken out one paragraph of proviso of the Notification and started demanding Customs duty on the raw materials, which are relatable to the Aluminium Dross, which have been cleared to DTA on the ground that this Aluminium Dross is non-excisable. In order to hold that they are non-excisable, she had relied on the Hon'ble Apex Court's decision. However, the Commissioner, Shri Ramprakash who passed the first order dated 29.07.2005, has correctly interpreted the Notification and has held that the proviso will be applicable only to a situation where f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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