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2015 (11) TMI 325 - SUPREME COURT

2015 (11) TMI 325 - SUPREME COURT - 2015 (325) E.L.T. 625 (SC) - Denial of concessional rate of duty - whether the clearances made by 100% EOUs are entitled to concessional rate of Customs duty provided under EPCG Schemes - Clearances made by 100% EOU - Held that:- concessional rate of duty shall be leviable in respect of clearances effected by 100% EOUs to EPCG units and even the condition of import through specific ports has been clarified to be inapplicable as clearance by 100% EOUs have been .....

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With C.A. No. 4354/2007, C.A. No. 4364-4366/2007, C.A. No. 5267-5270/2007 & C.A. No. 4543-4545/2007 - Dated:- 30-10-2015 - Mr. A.K. Sikri And Mr. Rohinton Fali Nariman, JJ For the Petitioner : Mr. Yashank Adhyaru, Sr. Adv., Mr. A.K. Panda, Sr. Adv., Mr. Tara Chandra Sharma, Adv., Mr. T.M. Singh, Adv., Ms. Sunita Rani Singh, Adv., Ms. Nisha Bagchi, Adv., Ms. Binu Tamta, Adv., Ms. Shirin Khajuria, Adv., Mr. Pankaj Pandey, Adv., Ms. Sujeeta Srivastava, Adv. And Mr. B. Krishna Prasad,Adv. For the Re .....

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and follow the aforesaid judgment. By the judgment dated 5.12.2006, excise duty amounting to ₹ 4,26,93,826/-, ₹ 7,22,75,718/- and ₹ 7,10,10,030/- along with penalty of ₹ 4,26,93,826/-, ₹ 5 crore and ₹ 5 crore have been imposed Signature Not Verified on M/s Sudhir Gensets Ltd. for varying periods, and a penalty of ₹ 10 lakhs has been imposed on Shri Yusuf Khan, Works Manager of Sudhir Gensets Ltd. by the Commissioner's order. Duty amounting to ₹ .....

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shan, Vice President respectively by the Commissioner's order in the aforesaid case. 2. The brief facts of these cases are that all the three assessees are 100% EOUs who were supplying goods to EPCG licence holders and accordingly, in terms of Section 3 of the Central Excise Act, 1944, such sales were to be considered as DTA sales for which Central Excise duty was required to be paid, which according to Section 3 of Central Excise Act, 1944 was an amount equal to the aggregate of duty of cus .....

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to concessional rate of basic customs duty @ 5% ad valorem or 10% ad valorem as the case may be and were exempted from additional duty and special additional duty in terms of notification No. 28/97 dated 1.4.97, notification No. 49/00 dated 27.4.2000 and notification No. 44/2002, 55/2003-Cus in force during the relevant period. The appellants have supplied the goods to these EPCG licence holders on payment of concessional Customs duty at the applicable rate by availing the benefit of the said n .....

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he present case the goods were not imported through these specified ports, concessional rate of duty prescribed under Notification No. 55/03 was not applicable to them. The show cause notices were adjudicated and duties were demanded and penalties imposed by the Commissioner in three orders as has been stated above. 3. Shri Yashank Adhyaru, learned Senior Advocate, appearing on behalf of the revenue, reiterated the submissions made before the Tribunal. His basic submission was that as what was, .....

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d not be correct for the simple reason that Section 3 of the Central Excise Act creates a legal fiction by which all sales made by these EOU's in the domestic tariff area to EPCG licence holders were to be governed by the Customs Act and Customs Tariff Act, and hence exemption notifications under these Acts alone were to be seen. 4. Section 3 of the Central Excise Act, as it stood at the relevant time, states: "Section 3. Duties specified in First Schedule and the Second Schedule to the .....

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xcise specified in clause (a) above, on excisable goods excluding goods produced or manufactured in special economic zones specified in the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) which are produced or manufactured in India, as, and at the rates, set forth in the said Second Schedule. Provided that the duties of excise which shall be levied and collected on any excisable goods which are produced or manufactured,- (i) in a free trade zone and brought to any other place .....

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g 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). Explanation 1. - Where in respect of any such like goods, any duty of customs leviable for the time being in force is leviable at different rates, then, such duty shall, for the purposes of this proviso, be deemed to be leviable at the highest of those rates. Explanation 2. - In this proviso, - (i) "free .....

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t Act.; (iii) "Special Economic Zone" means a zone which the Central Government may, by Notification in the Official Gazette, specify in this behalf." 5. The Tribunal, in the impugned judgments, construed the said Section as referring only to the Customs Act and not the Central Excise Act, and also relied upon the circulars issued by the Board from time to time to arrive at the conclusion that exemption notifications issued under the Customs Act would be applicable in the facts of .....

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ssued under Customs Act and the exemption notification issued under Section 5A will not be applicable in respect of clearances effected by 100% EOUs unless specifically provided for in the notification itself. We, however, find that the Commissioner has failed to observe that even though what is required to be paid is in the nature of central excise duty but through a legal fiction, clearances by 100% EOUs have been placed at par with the imports and it is for this reason that the duty required .....

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