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TMI Blog2002 (11) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notice dated 1-3-2001, directed the appellants to show cause why differential amount of Rs. 1,20,51,806/- should not be paid on the goods cleared into DTA during the aforesaid period. This demand of differential amount of duty, obviously, resulted from the Department's view that the correct method of calculation of the duty of excise to be paid by 100% EOU on goods cleared to DTA for the aforesaid period was as laid down by the C.B.E.C. in Circular No. 7/2001-Cus., dated 6-2-2001 which superseded the circular dated 18-5-94. The appellants contested the Department's view by submitting inter alia that the circular dated 6-2-2001 had no retrospective effect. The Original Authority, in adjudication of the dispute, confirmed the demand of duty, which has been affirmed by the lower appellate authority. Hence this appeal of the assessee before us. 2. Examined the records. Though, in the show-cause notice, there was no reference to any circular of the Board, the Adjudicating authority examined the issue before it in the light of the Board Circular No. 7/2001-Cus., dated 6-2-2001 and gave retrospective effect to the provisions of that circular so as to cover the period of demand of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereby exempts all excisable goods (hereinafter referred to as the said goods) specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and produced or manufactured in a hundred per cent export oriented undertaking or a free trade zone or an Electronic Hardware Technology Park (EHTP) unit or a Software Technology Park (STP) unit and allowed to be sold in India under and in accordance with the provisions of sub-paragraphs (a), (b), (c) and (d) of paragraph 9.9 or of paragraph 9.20 of the Export and Import Policy, 1st April, 1997 - 31st March, 2002, from so much of the duty of excise leviable thereon under Section 3 of the said Central Excise Act as is in excess of the amount calculated at the rate of fifty per cent of each of the duties of customs, which would be leviable under the Customs Act, 1962 (52 of 1962) or under any other law for the time being in force, read with any notification for the time being in force in respect of the duty so chargeable on the like goods produced or manufactured outside India if imported into India." 4. The demand of differential duty has resulted from the Revenue's understanding of the notification which is diametrical to that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10,000 (F) Duty payable by the EOU (50% of B+D) Rs. 5000 Thus, there is a differential of Rs. 1000 (Rs. 5000 - Rs. 4000) between the illustrations provided by the learned Counsel and the learned DR, taking Rs. 2000 as the value of the goods under Section 14 of the Customs Act. If the rival methods of calculation are applied to the facts of the instant case, the differential amount of duty will be Rs. 1,20,51,860/- for the goods cleared by the appellants to DTA during the period of demand. 6. Which one of the rival methods is sustainable in law requires to be examined now. For this purpose, one has to look afresh at Notification No. 2/95-C.E. as it stood during the POD. As per this notification, the excisable goods manufactured by 100% EOU and cleared to DTA are exempt from so much of the duty of excise (leviable under Section 3 of the Central Excise Act) as is in excess of the amount calculated at the rate of 50% of each of the duties of customs which would be leviable under the Customs Act or under any other law for the time being in force, on like goods produced or manufactured outside India, if imported into India. It has been, fairly, pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er place in India; shall be an amount equal to the aggregate of the duties of customs which would be leviable under the Customs Act, 1962 (52 of 1962) or any other law for the time being in force, on like goods produced or manufactured outside India, if imported into India and, where the said duties of customs are chargeable by reference to their value, the value of such excisable goods shall, notwithstanding, anything contained in any other provision of this Act, be determined in accordance with the provisions of the Customs Act, 1962 (52 of 1962) and the Customs Tariff Act, 1975 (51 of 1975)." 8. Notification No. 2/95-C.E. was issued by the Central Government under Section 5A(1) of the Central Excise Act to exempt 100% EOUs (and certain like categories of manufacturers) from payment of a part of the amount which was payable in terms of the above proviso. In the original terms of the notification, the exemption was in respect of so much of the duty of excise leviable on the goods under Section 3 of the Central Excise Act as was in excess of the amount calculated at the rate of 50% of each of the duties of customs which would be leviable under the Customs Act [read with any oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the charging provision of the taxing statute, i.e. the proviso to Section 3(1) of the Central Excise Act. But the period of demand in the instant case, as we have already noted, is February 2000 to January 2001. During this period, the material terms of the notification (as already noted) were at variance with those of the proviso, which gave rise to much confusion in the perceptions of the departmental authorities and the manufacturers, which, in turn, led to clarificatory circulars of the Board. 9. In the circular dated 18-5-94, the Board, according to its perception of the scope of exemption under Notification No. 2/95-CE, provided a method of computation of the duty to be paid by 100% EOU on the goods manufactured by them and cleared to DTA. It is this method which was adopted by the present appellants for the period of demand. However, in the circular dated 6-2-2001, the Board understood the notification better and revised its method of computation of duty. It is this method which is sought to be pressed into service by the Revenue for demanding differential duty from the appellants for the said period. The learned Counsel has fairly conceded that this method of computat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-93, predecessor to Notification No. 2/95-C.E.. It was in its circular dated 6-2-2001 that the Board, for the first time, provided a method of computation of duty which matched the terms of the provisio. But consistency with the proviso, incidentally, meant inconsistency with the Notification. This inconsistency was, later on, removed by the 1-3-2002 amendment of the notification. But the fact which should not be lost sight of in this context is that the circulars of the Board were clarificatory of notifications and not of the statutory provision. It has also to be borne in mind that the method of computation of duty handed down by C.B.E.C. through the circular dated 18-5-94 was consistent with the terms of the then prevailing notification and that identical terms came to be incorporated in the successor-Notification No. 2/95-C.E., which we have since examined. That method albeit inconsistent with the proviso to Section 3(1) ibid, matched the terms of Notification No. 2/95-CE. In view of the ruling of the Apex Court, the Board's circular dated 18-5-94 providing such a method of computation of duty of excise has got to be followed in the instant case in respect of the period of dem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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