9911796707
TMI Blog2008 (2) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... assessees are engaged 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quantity of aluminium dross generated have been calculated and correspondingly, the Customs Duty on them has been demanded. The then Commissioner, Visakhapatnam, in his Order-in-Original No. 09/2005-06 dated 29.07.2005, has interpreted the entire Notification and came to the conclusion that the assessees are not required to discharge any Customs Duty on the Aluminium Ingots imported, which are relatable to the Aluminium Dross removed in the DTA on payment of duty. However, the said order has not been accepted by the Revenue and, therefore, they have come in appeal. In respect of the other Order-in-Original No. 11/2006-07(RS) dated 09.02.2007, the Commissioner has held that in view of the proviso to para 3 of the Notification, the assessees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 manufacture of the wheels, while melting the Aluminium Ingots, the Aluminium Dross comes as a by-product. It should be borne in mind that the final product manufactured by the assessees in terms of the scheme is Aluminium Wheels. There is absolutely no dispute that these wheels have been manufactured and they have been exported. What the Customs wants is the quantity of ingots, which correspond to the Aluminium Dross cleared in the Domestic Tariff Area, should discharge Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iso to para 3 of the Notification. In terms of this proviso, if the finished goods (emphasis supplied) are not excisable or non-excisable, then, the liability to discharge the Customs Duty on the materials, which are used in the manufacture of such finished goods arises. Now, this proviso comes into force only in cases where the finished goods (emphasis supplied) of the EOU are not excisable. It will have no application 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 Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he warehouse authorised to carry out manufacturing process or other operation under section 65 of the Customs Act, 1962 (52 of 1962) and under the Manufacture and Other Operations in Warehouse Regulation, or cleared to the holders of certificate from Apparel Export Promotion Council and Council for Leather Export for duty free imports as referred to in clause (e) of the paragraph 6.9 of the Foreign Trade policy, without payment of duty: Provided that where such finished goods (including rejects, waste, scrap, remnants and by-products) are either non excisable or such finished goods (including rejects, waste, scrap, remnant and by-products), if imported, are leviable to nil rate of duty of customs specified under First Schedule to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me 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 finished goods are non-excisable. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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