TMI Blog1997 (12) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellants were operating as a 100% EOU. By letter dated 15-5-1987 Ministry of Industry in the Department of Industrial Development had given them permission to sell 25% of their production in the Domestic Trade Area (D.T.A.) subject to certain conditions. Assistant Collector held that under Section 3 of the Central Excises and Salt Act, 1944 read with Notification No. 249/85-Cus., dated 13-8-1985 which amended Notification No. 13/1981, duty of excise was leviable on goods which are not exported out of India but sold in India. Respondents paid the duty under protest and filed an Appeal before the Collector (Appeals) who reversed the Assistant Collector s order. Department is in Appeal against the said order. 3. On behalf of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . When the matter was called none appeared for the Respondents despite notice. Since the matter is quite old we decided to proceed with the case. Shri G.D. Sharma, JDR who appeared for the Appellant Commissioner contended that Notification No. 13/81-Cus. issued under Section 25 of the Customs Act cannot override the provisions of Section 68 of the said Act inas- much as under Section 68(b) warehoused goods could be cleared for home consumption only when import duty chargeable on such goods had been paid. All the goods imported by a 100 per cent EOU for manufacture of articles were required to be warehoused on their importation by virtue of condition No. 2 of Notification No. 13/81-Cus. In view of this condition all provisions contained in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. It was in view of this specific provision in the Central Excise Act that a condition was inserted in the exemption Notification No. 13/81-Cus. to permit the exemption from customs duty leviable on imported inputs used in the manufacture of finished articles allowed to be cleared for home consumption after obtaining specific permission of Chief Controller of Imports and Exports and also after payment of duty under Section 3. According to the Departmental Representative it would therefore, follow that if no duty is leviable under Section 3 of the Central Excise Act para 7 of Exemption Notification 13/81 Cus. would cease to be applicable and therefore, there is no escape from applying the statutory provisions applicable to warehoused goods. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods which on importation into India are used for purposes of manufacture of articles within the 100% EOU even if such articles are not exported out of India but are also allowed to be sold in India under the relevant Import/Export Policy. He has not dealt with the latter part of condition 7 requiring payment of duty leviable under Section 3 of the Central Excise Act. We are in agreement with the Department s contention that 100% EOUs are conceptually deemed to be islands intended to enable manufacture of goods for export and for that purpose insulated from all domestic restrictions and tariffs to enable competitiveness for the manufactured goods exported from such EOUs. As a corollary, when goods are sought to be cleared from EOUs for hom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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