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TMI Blog2023 (10) TMI 1517X X X X Extracts X X X X X X X X Extracts X X X X ..... e said Notifications were issued under Section 5A (1) of the Central Excise Act, 1944. The proviso to the said Section provides that under exemption of Section 5A shall not apply to excisable goods, which are produced or manufactured by a 100% EOU and brought to any place in India. Therefore, the appellant is not eligible for those exemption Notifications. 2.2 The proceedings were initiated against the appellants by issuing show-cause notices to demand differential duty along with interest and to impose penalties on the appellants. 2.3 Against the said order, the appellant is before us. 3. Heard both sides and considered the submissions. 4. Considering the facts that the said issue has been decided by this Tribunal in their own case vide Final Order No.77310-77311/2023 dated 16.10.2023, wherein this Tribunal has observed as under : "6. A short issue involved in this matter is that whether the appellant being a 100% EOU for clearance in DTA, is entitled to take the benefit of Notification No.2/2008-CE dated 01.03.2008 for clearance of Linear Alkyl Benzene Sulphuric Acid and Notification No.4/2006-CE dated 01.03.2006 for clearance of Spent Sulphuric Acid to fertilizer companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 as amended by Notification No. 58/2008-CE dated 07/12/2008. But, the Notification also provides that the duty payable here shall not be less than the duty of excise leviable on like goods produced or manufactured outside the EOU Unit. So, in the instant case, the assessee shall have to discharge duty liability at a rate not less than 10% adv. Here, I find that the assessee have paid Duty @ 10% adv. So, I come to the conclusion that the assessee have correctly paid their duty liability for clearance of LABSA during the relevant period in terms of Notification No. 23/2003-CE dated 31/03/2003 read with Notification No. 02/2008-CE dated 01/03/2008 as amended by Notification No. 58/2008-CE dated 07/12/2008. 6.2.3 It has also been expressly provided in Notification No. 23/2003-CE dated 31/03/2003 that it is subject to fulfilment of certain conditions - If, - (i) 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; (ii) exemption shall not be availed until Deputy Commissioner of Customs or Assistant Commissioner of Customs or Deputy Commissioner of Central Excise or Assistant Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods exported by them. Hence, there is no reason to deny the benefit of Notification No.23/2003-CE dated 31.3.2003 to the assessee. 6.2.6 I find that the DTA clearances made by the assessee were in terms of the LOP granted by the Development Commissioner. The permission for DTA sale was granted in terms of para 6.8 of the Foreign Trade Policy (2009-14) which reads as under : "Entire Production of EOU/ EHTP/ STP/BTP units shall be exported subject to following : Units, other than gems and jewellery units, may sell goods up to 50% of FOB value of export, subject to fulfilment of positive NFE, on payment of concessional duties. Within entitlement of DTA sale, unit may sell in DTA, its products similar to goods which are exported or expected to be exported from units. However, units which are manufacturing and exporting more than one product can sell any of these products into DTA, up to 90% of FOB value of export of the specific products, subject to the condition that total DTA sale does not exceed the overall entitlement of 50% of FOB value of exports for the unit, as stipulated above". In terms of the above provision, the assessee has been granted LOP for two categories of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computation of CVD to be paid by EOUs on the goods cleared into DTA. The restriction on EOUs for applying exemptions 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 section 3 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, exemptions of central excise duty shall also be applicable to EOUs for computation of duty on DTA clearances. It is, thus, viewed that there is no bar under the proviso to Section 5A ibid for considering excise exemption while calculating the additional customs duty component payable by an EOU on DTA clearances. Hence, the unit would be liable to pay duties based on applicable basic custom duty and applicable additional customs (CVD) in terms of the exemption vide SI. No. 32 of Notification No. 4/2006-CE dated 01.03.2006 on Sulphuric Acid subject to the condition 2 of the Annexure to this Notification. This was issued with approval of the Member (Cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearances, a 100% EOU unit is required to pay excise duties under the proviso to Section 3 of the Central Excise Act, 1944 equivalent to the rates of customs duties. The goods cleared into the DTA are virtually treated at par with imported goods and are charged duties equivalent to customs duties. (b) For sales to the DTA, the following duties equivalent to customs duties as per the proviso to Section 3 of the Act are payable : (i) Basic customs duty (BCD) at rates specified in the First Schedule. (ii) . Additional Customs Duty, which is equivalent to the Excise duty payable by other domestic units on the same products known as Countervailing Duty (CVD). The duty equivalent to CVD chargeable on DTA clearances is equal to the excise duty that similar domestic units have to pay on their clearances. Therefore, if there is an exemption for excise duty which is applicable to a domestic unit, that exemption also applies for the purpose of calculating CVD. The CVD is intended to countervail the Indian taxes and is ordinarily levied on imported goods in order to allow a level playing field to the Indian industry. 8. Further, in the case of, Satya Metals (supra), the Hon'ble High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r levy and collection of the Central Excise duty on the goods, other than Special Economic Zones, produced or manufactured in India following aspects appear :- (i) Towards the goods manufactured or produced, other than 100% EOU, attract the rate of duty set forth the first schedule of the Central Excise Tariff Act, 1985 (5 of 1986) and also special duty of excise at the rate set forth in the second schedule to the Central Excise Tariff, 1985. (ii) Specific provision for levy and collection of excise has been laid down for 100% 'EOU' when brought the excisable goods to any other place in India and thereby indicates that such amount of excise duty should be equal to aggregate duty 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. Explanation 1, states that where any duty of Customs for the time being is leviable at different rates than such duty, for the purpose of the proviso of Section 3 of the 'Act' shall be deemed to be leviable at the highest of those rates. Reading of Section 3 of 'Act' it appears that for 100% 'EOU' effecting clearances t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification No. 56/2002-C.E., dated 14-3-2002 for the State of Jammu & Kashmir, both known as Area Based Exemption Notifications under Central Excise issued by the Central Government under the provisions of Section 5A of the 'Act'. The claim of the petitioners that their unit squarely falls within the specified area of Notification No. 50/2003-C.E., dated 10-6-2003 is not disputed. The petitioners further claim that the excisable goods manufactured by them even do not fall in the negative list annexed to the said notification and further the petitioner unit is a new industrial unit started after 7-1-2003. The petitioners also filled their declaration with the Assistant Commissioner of Central Excise, Shimla and thereby complying with the conditions of the notification for claiming exemption for the purpose of calculating Additional Duty of Customs under Section 3(1) of the Customs Tariff Act, 1975. This notification is applicable to any unit because of use of expression "a unit" appearing in main para of the notification and the scope of extending the benefit is therefore applicable for discharging their liability to pay Additional Duty of Customs under Section 3(1) of the Customs T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bar in Area based exemption notification, referred above for 100% 'EOU' for calculation the Additional Duty of Customs under Section 3(1) of the Customs Tariff Act, 1975. It is only by discharging the liability to pay the Additional Duty of Customs and which is equal to excise duty leviable on like goods when produced in India that such exemption notification has been considered. It is by way of specific provision of Section 3(1) of the Customs Tariff Act, 1975 that Area based exemption can be considered for finding about the excise duty on like goods chargeable when produced in India. Moreover, the order dated 17-3-2011 of DGEP while upholding DGEP clarification dated 24-9-2010 does not dispute the reasoning appearing for the expression "specifically provided" in Section 5A of the 'Act', as appearing in letters dated 18-1-2008 and 6-4-2009. In fact the judgments of Hon'ble Delhi High Court in the case of Plastic Processors, as well as judgments of Gujarat High Court in the case of Lucky Star International (supra), were confirmed by Hon'ble Supreme Court, showing that for extending benefit of Central Excise exemption notification, the provisions of Section 5A(1) and its Proviso und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 17-3-2011 is legally not sustainable. 28. The order dated 17-3-2011 refers to there being two rates of duties under Section 3(1) of the Customs Tariff Act, 1975. The concept of two rate of duties under Section 3(1) of the Customs Tariff Act applies where the goods are not being produced in India in the State of Himachal Pradesh, whereas, the issue of charging highest rate of duties when chargeable has already been settled by Hon'ble Supreme Court in the case of Good Year India Limited v. Collector of Customs, Bombay, (1997) 2 SCC 582 = 1997 (90) E.L.T. 7 (S.C.). Relying on the said decision, the effective rate of duty would be NIL rate for calculating the Additional Duty of Customs. 29. Regarding contention of the respondent/Union of India that extending benefits of Area base Central Excise notification to the petitioners may create disparity vis-à-vis other manufacturers who are not 100% 'EOU', it may be seen that when the benefits are provided under Foreign Trade Policy to the 100% 'EOU', can bring raw material and capital goods without payment of Customs and excise duty. As such the petitioner unit cannot be compared with other manufacturers regarding grantin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordance with the provisions of Export and Import Policy and subject to the relevant conditions specified in the Annexure to this Notification." 11. We find that at Sl.No.2 of the said Notification, it is specifically mentioned that in respect of all goods under any Chapter, the Central Government exempts goods from so much of duty of excise leviable thereon is in excess of the amount equal to 50% of the duty leviable under Section 3 of the Central Excise Act, 1944, provided that the duty payable with this Notification in respect of the said goods shall not be less than the duty of excise leviable on the like goods produced and manufactured outside EOU, which is specified in the said schedule read with any other relevant Notification issued under Section 5A(1) of the Central Excise Act, 1944. 12. Therefore, the duty payable in accordance with this Notification in respect of the said goods shall not be less than the duty of excise leviable on the like goods produced or manufactured outside EOU Unit, which is specified in the said Schedule read with the any other relevant Notification issued under Section 5A(1) of the Central Excise Act, 1944. 13. We, therefore, hold that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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