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TMI Blog2023 (3) TMI 1505X X X X Extracts X X X X X X X X Extracts X X X X ..... instead of export, the amount duty payable (50% of the applicable customs duties) has been prescribed under Notification No.2/95-CE dt. 4/1/1995; even though the nature of duty payable by an 100% EOU is excise duty, in computing the BCD and other duties as applicable are considered. This confusion has been addressed in detail by the Larger Bench of the Tribunal in the case of Vikram Ispat [ 2000 (8) TMI 111 - CEGAT, NEW DELHI] where it was held that ' in agreement with the learned Advocates that the duty which is levied on the goods manufactured and cleared by 100% E.O.Us to the Domestic Tariff Area is a duty of Excise and not a duty of Customs on account of a measure being the Customs duty provided in proviso to Section 3(1) of the Central Excise Act.' The entitlement for MODVAT credit by the receiving manufacturing unit should always be less than the CVD payable on like articles imported into India. In the present case, the adjudicating authority has categorically through example referring to invoices observed that the additional duty on which the assessee has availed cenvat credit is less than the additional duty on import of like goods at the relevant point of time. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tribunal, so also the grounds of appeal. As rightly argued by the learned counsel for the revenue a specific ground has been raised in the grounds of appeal with regard to the applicability of the notification No.177/86 and 21/99 and that the tribunal has not chosen to refer to the same in the impugned order. If that is o, it is always open to the appellant to approach the tribunal and seek a review of the order. 6. In these circumstances, we are not inclined to entertain this appeal, instead we deem it proper to direct the revenue to seek review of the order in the light of grounds raised in the grounds of appeal, as argued before us. No opinion is expressed on the merits of the matter. 7. Appeal stands disposed of with liberty to approach the tribunal and seek a review of the order. 3. Consequent to the order of the Hon ble High Court, the appellant/Revenue filed two miscellaneous applications against the respective appeals bearing No. E/Misc./220-221/2006 seeking review of the order, inter alia, mentioning in the grounds of review that even though specifically the Revenue had referred to the Notification Nos. 177/86-CE dt.01.3.1986 and 21/1999 CE(NT) dt. 28/02/1999, the same was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it, thus, in our opinion, it is inappropriate to enter into a discussion on the judgment of the Hon ble High Court which gave liberty to the revenue to file review petitions. As neither side filed appeal against the High Court s order, hence, the same is binding on all concerned. Therefore, in the circumstances, it is suggested by the Bench to advance argument on merit of the applications to which, the Revenue as well as the assessee agreed and advanced their arguments on merit. 7. Learned AR for the Revenue advancing reasons in support of the applications submitted that this Tribunal has referred to the Notification No.5/94CE(NT) dt. 01.3.1994 while deciding both the appeals in favour of the respondent. He submits that in their grounds of appeal specifically Revenue has challenged the order of the authorities below referring to Notification No.177/1986 dt. 01.3.1986 and Notification No.21/99CE(NT) dt. 28.02.1999, which prescribed that the credit of specified duty paid in respect of inputs produced or manufactured by 100% EOU shall be restricted to the extent which is equal to the additional duty leviable on like goods under Section 3 of the Customs Tariff Act, 1975. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able is incorrect. Only in the case of appeal E/1219/2003, the period from 1/03/1999 to 31/03/2000, the notification No.21/99-CE(NT) dt. 28/02/1999 was applicable. It is his contention that the Tribunal, after taking into consideration the ratio laid down by the Larger Bench in the case of Vikram Ispat Vs. CCE [2000(120) ELT 800 (LB)] and also the judgement of the Tribunal in their own case reported as Pepsico India Holdings Ltd. Vs. CCE, Mumbai-II [2001(130) ELT 951 (Tri. Mumbai)], decided the issue in favour of the assessee. The Revenue assailing the said observation in the applications before this Tribunal stated that the order passed by the Larger Bench in the case of Vikram Ispat (supra) has been appealed before the Bombay High Court. He has submitted that the said ground of the Revenue cannot hold water as the Hon ble Bombay High Court dismissed the Revenue s appeal as reported at CCE, Raigad Vs. Vikram Ispat Ltd. [2016(334) ELT 14 (Bom.) and no appeal thereafter filed before the Supreme Court. Further responding to the argument of the Revenue that the Notification No.21/99-CE(NT) was not subject matter of the consideration by the Larger Bench in Vikram Ispat s case, the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while passing the order, the Tribunal did not take note of relevant Notifications viz. Notification Nos.177/86 and 21/99. Thus, it is necessary to examine all the notifications issued from time to time. 13. The relevant part of the notifications issued under Rule 57A of erstwhile Central Excise Rules, 1944 from time to time during the relevant period, prescribing the nature of excise duty and the extent admissible as credit to a manufacturer on the duty paid on inputs received from an 100% EOU are as below:- Notification No. 177/86-CE .. Provided that (1) credit of specified duty in respect of any inputs produced or manufactured (a) in a free trade zone and used in the manufacture of final products in any other place in India ; or (b) by a hundred per cent export-oriented undertaking and used in the manufacture of final products in any place in India, shall be restricted to the extent of duty which is equal to the additional duty leviable on like goods under section 3 of the Customs Tariff Act, 1975 (51 of 1975) paid on such inputs ; .. Notification No. 05/94-CE(NT): Provided that, - (1) credit of specified duty in respect of any inputs produced or manufactured - (a) in a free trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er duties of customs which are considered while computing the Excise duty payable by an 100% EOU while clearing their goods in DTA as per notification No.2/95-CE dt. 04/01/1995. 16. In our opinion, the Revenue s argument is marred with confusion inasmuch as the goods manufactured by an 100% EOU and allowed to be sold in India, instead of export, the amount duty payable (50% of the applicable customs duties) has been prescribed under Notification No.2/95-CE dt. 4/1/1995; even though the nature of duty payable by an 100% EOU is excise duty, in computing the BCD and other duties as applicable are considered. This confusion has been addressed in detail by the Larger Bench of the Tribunal in the case of Vikram Ispat (supra). While emphasising, the difference between nature of duty and nature of levy, it is observed in para 12 of the said judgment as under:- 12. We have considered the submissions of all the sides. The concept of 100% E.O.U. was brought with an idea to increase the export from the country. These units were provided facilities, among other things, of importing capital goods raw materials, components, etc. without payment of customs duty and also to obtain similar goods fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erals produced by the mines would not by itself make the levy a duty of excise. Again the Supreme Court in the case of U.O.I. v. Bombay Tyre International, supra, held that Section 3 of the Central Excise Act creates the charge and defines the nature of the charge that it is a levy on excisable goods, produced or manufactured in India. The levy of tax is defined by its nature, while the measure of the tax may be assessed by its own standard . The Supreme Court held that When enacting a measure to serve as standard assessing the levy the Legislature need not contour it along lines which spell out the character of the levy itself. In this case the Supreme Court did not accept the contention that because levy of excise is a levy on goods manufactured, the value of excisable goods must be limited to the manufacturing cost plus the manufacturing profit. We are, thus, in agreement with the learned Advocates that the duty which is levied on the goods manufactured and cleared by 100% E.O.Us to the Domestic Tariff Area is a duty of Excise and not a duty of Customs on account of a measure being the Customs duty provided in proviso to Section 3(1) of the Central Excise Act. 17. After consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Special Importance) Act, 1957, the Modvat Credit will not be available in respect of such duty. 18. The principle laid down in the aforesaid judgment is loud and clear. The entire amount of excise duty paid as per Notification No.02/95-CE dt. 04/01/1995 be considered as additional duty (CVD) and not one of the components as additional duty considered in the said Notification in computing the duty for the purpose of allowing Modvat credit as per Notification No.5/94-CE(NT) and No.21/99-CE(NT). The only criteria that needs to be examined is that the excise duty so computed, which is equivalent to 50% of the Customs duties mentioned in the Notification No.2/95-CE dt. 04/01/1995, should not be more, when goods of like nature, when imported into India, at the same time attracting additional duty (CVD), for availing Modvat by the receiving manufacturing unit. In other words, the entitlement for MODVAT credit by the receiving manufacturing unit should always be less than the CVD payable on like articles imported into India. In the present case, the adjudicating authority has categorically through example referring to invoices observed that the additional duty on which the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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