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2013 (8) TMI 161 - HC - CustomsCVD - Benefit of Area based exemption to the 100%EOU - determination of Additional Duty of Customs (CVD) - Extending benefits of Area base Central Excise notification to the petitioners may create disparity vis-ŕ-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– Held that:- Benefit granted under FTP, a 100% ‘EOU’/the petitioner unit is accountable for the earning of net foreign exchange (NFE) for the country unlike other manufacturers. Moreover, the petitioners are paying basic Customs duty under Section 12 of the Customs Act, 1962, whereas, other manufacturers while functioning in the State of H.P. though are claiming benefits of area base exemption but are not paying such Customs duty – Central Government intentionally provided the tax incentive benefit including 100% excise duty exemption to the special category State of Himachal Pradesh, as such, any disparity with other manufacturer of India, located in different parts, shall not be created. Additional Duty of Customs (CVD), chargeable under Section 3 of the Customs Tariff Act, 1975 and applicability of exemption Notification No. 50/2003-C.E.- Held that:- Issue has already been settled by Hon’ble Supreme Court in Hyderabad Industries Ltd. [1999 (5) TMI 29 - SUPREME COURT OF INDIA]by following and affirming its earlier verdict in Thermax Pvt. Ltd.[ 1992 (8) TMI 156 - SUPREME COURT OF INDIA], wherein it has been held that section 3(1) of the Customs Tariff Act “Specifically mandates that the CVD will be equal to the Excise -Duty for the time being leviable on a like article if produced or manufactured in India. In other words, we have to forget that the goods are imported, imagine that the importer had manufactured the goods in India and determine the amount of Excise Duty that he would have been called upon to pay in that event.” - The explanation to Section 3 has two limbs. The first limb clarifies that the duty chargeable under sub-section (1) would be the excise duty for the time being leviable on a like article if produced or manufactured in India. The condition precedent for levy of additional duty thus contemplated by the explanation is that the article is produced or manufactured in India. The second limb to the explanation deals with a situation where “a like article is not so produced or manufactured” - The use of word “so” implies that the production or manufacture referred to in the second limb is relatable to the use of that expression in the first limb which is of a like article being produced or manufactured in India - While calculating CVD it has to be assumed that the goods were manufactured in India and the applicable rate of duty to such manufactured goods has to be applied to the imported goods. The effective rate of excise duties for a unit located in the specified area mentioned in 50/2003-C.E. is Nil and it is this rate alone which can be applied for the purpose of calculating ‘CVD’ in terms of the observations of the Hon’ble Supreme Court. Order dated 17-3-2011 passed by ‘DGEP’/i.e. respondent No. 3 is set aside and writ of mandamus is being issued directing the respondents to allow benefit of exemption Notification No. 50/2003-C.E., dated 10-6-2003 to be given to the petitioners and further direction is being issued not to demand differential excise duty from the petitioners consequent upon setting aside the order dated 17-3-2011 of ‘DGEP’ and all connecting proceedings initiated against the petitioners shall also stand set aside. As such, the petitioners are entitled to the benefit of exemption Notification No. 50/2003-C.E., dated 10-6-2003 and also entitled for making goods by way of DTA clearances from the petitioner unit in reference to the aforesaid exemption notification - Decided in favor of Assessee.
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