TMI Blog2015 (11) TMI 1171X X X X Extracts X X X X X X X X Extracts X X X X ..... n amount equal to the duty of excise leviable on like goods produced or manufactured in India produced in an undertaking other than in a 100% Export Oriented Undertaking, if sold in India. - notification states that duty calculated on the said basis would only be payable to the extent of like goods manufactured in India by persons other than 100% EOUs. This being the case, it is clear that in the absence of actual sales in the wholesale market, when goods are captively consumed and not sold, Rule 8 of the Central Excise Rules would have to be followed to determine what would be the amount equal to the duty of excise leviable on like goods. Duty of excise arrived at based on Section 3(1) Proviso (ii) is more than the duty determinable for like goods produced or manufactured in India in other than 100% EOUs. Since the notification exempts anything that is in excess of what is determined as excise duty on such like goods, and considering that for the entire period under question the duty arrived at under Section 3(1) proviso (ii) is in excess of the duty arrived at on like goods manufactured in India by non 100% EOUs, it is clear that the whole basis of the show cause notice is ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a removed to the respondent s own units would be determined on the basis of the export price of similar goods and not 115% of the cost of production. 3. The order in original dated 31.5.2006 passed by the Additional Commissioner upheld the show cause notice and confirmed the duty amount, interest, and penalty as follows:- ORDER (1) I confirm the duty amount of ₹ 42,86,079/- (Rupees Forty two lakhs, eighty six thousand and seventy nine only) (Centvat: ₹ 42,62,545/- and Education Cess ₹ 23,534/-) under Section 11A (1) of the Central Excise Act, 1944. (2) I demand appropriate interest on the above amount confirmed under Section 11AB(1) of the Central Excise Act, 1944. (3) I impose a penalty of ₹ 42,86,079/- (Rupees Forty two lakhs, eighty six thousand and seventy nine only) under Section 11A (1) of the Central Excise Act, 1944. (4) As I have imposed penalty on them under Section 11AC of Central Excise Act, 1944, I do not impose a separate penalty under Rule 173Q or 209 of erstwhile Central Excise Rules 1944 and Rule 25 of erstwhile Central Excise (No2) Rules, 2001 read with Section 38A of Central Excise Act, 1944 and Rule 25 of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellate authority. 8. Having heard learned counsel for the parties we think it is necessary to first extract the relevant statutory provisions and the notifications insofar as they have a bearing on the facts of the present case. 9. Section 3(1) proviso as it stood at the relevant time is extracted hereinbelow:- SECTION 3. Duties specified in First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 to be levied. 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 or a special economic zone and brought to any other place in India; or (ii) By a hundred per cent export-oriented undertaking and brought to any other 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed to be sold in India under and in accordance with the provisions of paragraphs 102 and 114 of the Export and Import Policy 1 April 1992 31 March 1997, from so much of the duty of excise leviable thereon under section 3 of the Central Excise Act, 1944 (1 of 1944), as is in excess of an amount equal to the duty of excise leviable under the said section 3 of the Central Excise Act, on like goods, produced or manufactured in India other than in a hundred per cent export-oriented undertaking or a free trade zone, if sold in India. 13. To similar effect for the subsequent period is the notification No.23 of 2003 dated 31.3.2003. 14. The first thing to be noticed is that Section 5A under which the exemption notifications are issued states in the proviso that no exemption shall apply to excisable goods which are produced or manufactured by a 100% Export Oriented Undertaking and brought to any place in India unless specifically provided in such exemption notification. When we turn to the notification dated 1.3.1997, we find that there is specific provision for exemption of certain goods produced in a 100% EOU wholly from raw materials produced or manufactured in India. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilar goods c. export price of identical/similar goods d. nature of sale transactions etc. The settled law spoken of would refer to a CBEC circular No.268/85-CX.8 dated 29.9.1994 which deals with valuation of goods manufactured by units working under the 100% EOU scheme. The said circular refers to Rule 8 of the Customs Valuation Rules and not the Central Excise Valuation Rules. The four factors laid down in the said circular have relevance only qua goods that are cleared in the DTA and how their valuation is to be arrived at. We have already seen that the manner of valuation of such goods would not be relevant for the simple reason that what has to be determined in the facts of the present case is the valuation of the duty of excise leviable under Section 3 of the Central Excise Act on like goods produced or manufactured in India by undertakings other than 100% EOUs. The application of this circular and consequently any FOB export price would be wholly irrelevant for the purpose of this case and as has been held above, is only for arriving at the duty of excise leviable under Section 3(1) Proviso (ii) of the Central Excise Act. On the facts of the present case, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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