TMI Blog2007 (4) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... ra 9.10(b) of Export and import Policy (Exim Policy) 1997-2002. In this civil appeal, the question for consideration is the rate of duty applicable to sales falling under para 9.10(b). 2. On 4-11-1999 a show cause notice was issued by the Joint Commissioner of Central Excise, Mumbai to the appellant stating that the appellant was not paying appropriate duties on the goods cleared as per the permission granted by the Development Commissioner. According to the show cause notice, the appellant had paid Countervailing Duty (CVD) @ 30% on Texturised Polyester Yarn plus Rs.9 per kg. on Dyed Polyester Yarn cleared under para 9.10(b) of Exim Policy against foreign exchange. According to the show cause notice, under the proviso to sub-section (1) of Section 3 of the Central Excise Act, 1944, (the 1944 Act ) duty of excise was leviable on excisable goods produced by 100% EOU and allowed to be sold in India, equal to the aggregate of the duties of customs leviable under Section 12 of the Customs Act, 1962, on like goods produced or manufactured outside India if imported into India, and where the said duty of customs is chargeable by reference to value; the value of such goods shall be det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduce final products for export in cases where r the final products/articles stood produced or manufactured by 100% EOU approved by the Commissioner. According to the Tribunal, para 7 of notification No. 53/97 was not applicable to the present case since pan 7 applied only to goods (raw materials) which were imported for the manufacture of articles al towed to be sold in India on payment of duty under Section 3(1) of the said 1944 Act. According to the Tribunal, para 7 applied only to DTA sales falling under para 9.9 and it did not apply to DTA sales (supplies) falling under para 9.10(b) and if they are equated still the appellant was not entitled to the benefit, in full, of the exemption Notification no. 2/95-CE. According to the Tribunal, the appellant was also not entitled to the benefit of exemption under Notification No. 2/95-CE because that notification was applicable to goods allowed to be sold in India in accordance with the provisions of para 9.9 of Exim Policy 1997-2002. According to the Tribunal, notification bearing no. 2/95-CE had the effect of fixing a value or the amount of which 50% of the duty leviable under Section 12 of the Customs Act, 1962 stood payable. But S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 under the said section 12 is leviable at different rates, then, such duty shall, for the purposes of this proviso, be deemed to be leviable under the said section 12 at the highest of those rates. Explanation 2. - In this proviso, - (1) free trade zone means the Kandla Free Trade Zone and the Santa Cruz Electronics Export Processing Zone and includes any other free trade zone which the Central Government may, by notification in the Official Gazette, specify in this behalf; (ii) hundred per cent export-oriented undertaking means an undertaking which has been approved as a hundred per cent export-oriented under taking by the Board appointed in this behalf by the Central Government in exercise of the powers conferred by section 14 of the Industries (Development and Regulation) Act, 1951 (65 of 1951), and the rules made under that 6. We also quote hereinbelow the exemption Notification No. 2 /95-CE : GENERAL EXEMPTION NO.55 Exemption to all excisable goods produced in 100% EOU, FTZ, EHTP or STP units whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, rejects, scrap, waste or remnants :- (a) such goods being cleared for home consumption are similar to the goods which are exported or expected to be exported from the unit during the specified period of such clearances in terms of the Export-Import Policy, 1st April, 1997- 31st March, 2002; (b) the value of such goods being cleared for home consumption from the unit specified in column (2) of the Table hereto annexed, does not exceed the percentage limit of the entitlement as specified in the corresponding entry in column (3) of the said Table for such clearance, calculated with reference to the total value of production of goods which are identical in all respects to those under clearance; (c) The balance of the production of the goods which is identical to such goods under clearance of home consumption, is exported out of India or disposed of in terms of paragraph 9.10 of the said Export and Import Policy, (ii) In the case of the said goods being software cleared for home consumption (a) the value of such software cleared during the period specified does not exceed twenty-five per cent of the total value of production of the software in the unit; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... net foreign exchange earnings as a percentage of exports less than ten per cent NIL (b) net foreign exchange earnings as a percentage of exports of ten per cent or more but not exceeding twenty five per cent Upto thirty per cent of the production in value terms of the electronic items, including components manufactured in the unit. (c) net foreign exchange earnings as a percentage of exports exceeding twenty five per cent Upto forty per cent of the production in value terms of electronic items, including components manufactured in the unit. 3. Other Units 25 per cent (emphasis supplied) 7. For the following reasons, we find merit in this civil appeal. Firstly, on examination of the Exim Policy we find that the said Policy as a rule stated that every 100% EOU was obliged to manufacture or produce from duty free imported raw materials capital goods etc., finished products/articles and as a rule every 100% EOU was obliged to export its entire production and earn foreign exchange. This was what was called as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econdly, once the permission was granted by the competent authority under the Exim Policy to make DTA sales against foreign exchange, the assessee (appellant herein) was entitled to the benefit of concessional rate of duty under Notification No. 2/95-CE. If DTA sales against rupee were allowed the benefit of Notification No. 2/95-CE, then DTA supplies against foreign exchange, which were at par with physical exports, cannot be denied the same benefits and they cannot be subjected to a higher duty. Thirdly, once DTA sales against foreign exchange are covered by the above expression allowed to be sold in India , all issues relating to calculation of the duty payable in terms of notification No. 2/95-CE will have to be decided afresh by the adjudicating authority and accordingly, we hereby remand the matter back to the Commissioner for calculating the duties payable by the assessee in terms of Notification No. 2/95. The Commissioner will calculate the duties accordingly as hereinabove mentioned. Lastly, we are of the view that there is no fundamental difference, as far as the exemption notification No. 2/95-CE is concerned, between DTA sales against foreign exchange and DTA sales aga ..... X X X X Extracts X X X X X X X X Extracts X X X X
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