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TMI Blog2023 (6) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise Act, 1944 to consider the exemption while calculating the additional customs duty payable b y an EOU on DTA clearance. The issue whether a 100% EOU is eligible to avail the benefit of exemption notification is no longer res integra and is squarely covered by the decision of the Tribunal in the case of COMMISSIONER OF C. EX., HYDERABAD-IV VERSUS SHANTA BIOTECHNICS LTD. [ 2010 (7) TMI 334 - CESTAT, BANGALORE ] has held that There is no dispute that the goods, which are manufactured and cleared by the assessee, are exempt from payment of Central Excise Duty under Notification 4/2006-C.E. After appreciating the facts, applying the Board circular as well as the decision of the Tribunal, it is opined that the demand cannot sustain and requires to be set aside. The appeal succeeds on merits. Appeal allowed. - Excise Appeal No.41519 of 2013 - Final Order No.40431/2023 - Dated:- 14-6-2023 - MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL) AND SHRI M. AJIT KUMAR, MEMBER (TECHNICAL) Shri Raghavan Ramabhadran, Advocate for the Appellant Smt. K. Komathi, ADC (AR) for the Respondent ORDER Brief facts are that the appellant is an 100% EOU and also holds a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ERL had issued a duty exemption certificate to the appellant certifying that the GSM band is exempt in terms of Notification No. 10/97-CE dated 1.3.1997. 4. Accordingly, on 14.9.2011, the appellant supplied GSM band to DERL for value of Rs.4,04,87,748/- inclusive of CST without payment of excise duty. In their ER-II Return, the appellant had classified the GSM band under Central Excise Tariff Heading 90304000 of the First Schedule to the CEETA, 1985 which covers other instruments and apparatus, specifically designed for telecommunications . The learned counsel submitted that the duty liability on items falling under Customs Tariff Heading 90304000 is free and accordingly the appellant did not remit any excise duty equal to basic customs duty on clearance of such items. With respect to excise duty equal to countervailing duty, the appellant claimed the benefit of exemption under Notification 10/1997-CE dated 1.3.1997. 5. Show Cause Notice dated 4.10.2012 has been issued by the department demanding Rs.62,81,173/- excise duty equal to basic customs duty, countervailing duty and cess. It is alleged in the Show Cause Notice that the appellant is ineligible to claim the benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e covered under CTH 90304000 as per the Customs Tariff Act, 1975. BCD leviable on this item is free. Consequently, in the instant case, the appellant is not liable to pay any excise duty equal to BCD. Therefore, the impugned order confirming the BCD to the tune of Rs.19,27,988/- is incorrect and requires to be set aside. 9. Further, as the Show Cause Notice has not disputed the classification, the adjudicating authority has travelled beyond the Show Cause Notice by redetermining the classification under 8527 99 90. To support this argument, the learned counsel relied upon the decision of the Hon'ble Supreme Court in the case of Commissioner of Customs, Mumbai Vs. Toyo Engineering India Ltd. reported in 2006 (201) ELT 513 (SC). 10. Such classification adopted by the department is completely incorrect because the product in question is specifically designed for telecommunication devices namely mobile phones. Hence the instruments and apparatus specially designed for telecommunication devices are covered under Chapter Heading 90304000 which is the classification adopted by the appellant. 11. The adjudicating authority has confirmed the demand of Rs.40,48,775/- as part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputation of duty on DTA clearances. 15. The learned counsel submitted that the issue is no longer res integra and stands covered by the following decisions, wherein it has been held that exemption of central excise notification shall be extended to EOU for computation of CVD on DTA clearances:- (a) CCE vs. Maiden Trading 2001 (132) ELT 431 (Tri. Del.) (b) Ratnagiri Textiles Ltd. Vs. CCE, Jaipur 2003 (161) ELT 975 (c) Sahajanand Technologies Ltd. Vs. CCE, Daman 2007 (210) ELT 108 (d) CCE, Daman Vs. Sahajanand Technologies Ltd. 2015 (325) ELT 625 (SC) (e) CCE Hyderabad Vs. Shanta Biotechnics Ltd. 2010 (259) ELT 447 (Tri. Bang.) (f) CCE Vs. Gugan Mills and Saradha Terry Towels Ltd. 2018 (6) TMI 908 CESTAT, Chennai (g) CCE, Salem Vs. Blue Mount Textiles 2018 (8) TMI 315 CESTAT Chennai (h) CCE, Chennai Vs. Triumph International India 2018 (8) TMI 1166 CESTAT, Chennai. 16. The learned counsel submitted that the issue involved is interpretation of law and the appellant was under bonafide belief that they were not liable to duty on GSM, there is no positive act of suppression on the part of the appellant established by the department. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 21.2.2008 on the above cited subject. 2. The issue has been examined. EOUs are required to pay duties on their clearance to DTA equating such clearance at par with imports in terms of proviso to section 3 of the Central Excise Act, 1944. For the purpose of calculating additional duty (CVD) on imported goods under section 3 of the Customs Tariff Act, 1975, any general excise exemption as well as conditional excise exemption, if conditions are satisfied, would be applicable for determining the CVD liability. Thus, there is no bar in applying an exemption notification issued under section 5A of the Central Excise Act for the purpose of computation of CVD to be paid by EOUs on the goods cleared to DTA. The restriction on EOUs for applying exemption issued under section 5A of the Central Excise Act is for the purpose that EOUs should not pay excise duty only as in the case of clearances from DTA units, unless so intended. This would render section3 of the Central Excise Act redundant which require EOUs to pay central excise duty equivalent to the aggregate of customs duties. However, as in the case of import, wherein CVD is paid equal to excise duty as applicable, exemption of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined in exactly the same manner as is done in respect of imported goods. This implies that for determining the duties of excise under proviso to section 3(1) of the Central Excise Act, 1944 on the goods cleared to the DTA by the EOUs, the exemption under the relevant Customs Notifications and Excise Notifications, if any, have to be provided. Therefore, I am of the view that the assessee is liable to pay only the effective rate of Additional Duty of Customs under section 3(1) of the Customs Tariff Act on clearances of the goods into the DTA. This view is supported by the ratio of the decisions referred and relied briefly dealt as under. (a) U.O.I. v. Plastic Processors [2005 (186) E.L.T. A27 (S.C.)]. The Apex Court maintained the decision of the Delhi High Court that CVD was payable at effective rates and not at tariff rate on clearances by a 100% EOU into the DTA. The Delhi High Court [2002 (143) E.L.T. 521 (Del.)] had disposed of certain writ petitions challenging the legality of Circular No. 38/2000-Cus. dated 10th May, 2000 issued by the Central Board of Excise Customs, issued to clarify doubt regarding levy of Additional Duty of Customs (CVD) on Domestic Tariff Area (in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) CCE Jaipur v. Maiden Trading Company (P) Limited - 2001 (132) E.L.T. 431 (Tri.-Delhi) Clearances to Domestic Tariff Area (DTA) to be taken as produced in India - Benefit of exemption under Notification Nos. 5/98-C.E. dated 2-6-1998 and 5/99-C.E. dated 28-2-1999 available and no counterveiling duty leviable on such goods . The CESTAT, in the aforesaid decision, relied upon the decisions of the Apex Court in Hyderabad Industries [1999 (108) E.L.T. 321 (S.C.)]; Thermax Pvt. Limited v. Collector [1992 (61) E.L.T. 352(S.C.) and Varsha Exports v. UOI - 2000 (40) RLT 9 (Guj.) (c) Ratnagiri Textiles Ltd. v. Commissioner of Central Excise, Jaipur-II [2003 (161) E.L.T. 975 (Tri.-Del.) :- The CESTAT relied upon the earlier decision of the Hon ble Gujarat High Court in the case of Varsha Exports and Others v. UOI and Others - 2000 (40) RLT 9 (Guj.) and letter F. No. 305/113/94-FTT, dated 19th February, 1998 of the Central Board of Excise and Customs, to hold that the additional duty of Customs (CVD) was payable at effective rate and not at tariff rate in the case of clearance of goods by an 100% EOU in the DTA. Appeal filed by the department in Supreme Court against the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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