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Commissioner of Central Excise, Lucknow Versus Srivatsa International Ltd.

2016 (1) TMI 264 - CESTAT ALLAHABAD

100% EOU - DTA sale of textile articles - exemption from payment of CVD under Notification No. 30/04 dated 9.7.2004 issued under Section 5A(1) of the Central Excise Act - whether the proviso to Section 5A(1) will be applicable in the present case while considering application of Notifications 29/2004 and 30/2004 - Held that:- There has been total mis-appreciation of this provision of law. Section 5A(1) only grants power to exempt excise duty leviable under Section 3(1) of the Central Excise Act. .....

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is equal to the aggregate of customs duties. - The duty payable on goods produced and cleared by a 100% EOU is to be seen in terms of provisions of Section 3(1) and while calculating this duty, the CVD component is to be calculated on the basis of excise duty payable on such products produced in India. And if such duty payable is a concessional rate of duty in terms of a Notification, the same notification will apply for calculating CVD on goods produced and cleared by a 100% EOU. The findings .....

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imported. Therefore, we see no reason to deny the benefit of this notification. Reliance is placed on Hon'ble Supreme Court judgment in the case of SRF Ltd. v. CC [2015 (4) TMI 561 - SUPREME COURT]. In a similar situation and in the context of similar circumstances of Notification No. 6/2002, the Apex Court held that the assessee were entitled to the exemption from payment of CVD in terms of Notification No. 6/2002 as no credit could be availed nor was availed in respect of the imported goods. - .....

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e appellant are a 100% EOU manufacturing textile and textile articles. They had permission from Development Commissioner for DTA sales. On such sales, they paid Basic Customs duty, Edu. Cess under the provisions of Section 3(1) proviso of the Central Excise Act, 1944. Under the proviso to this section, the duty payable on any excisable goods manufactured by a 100% EOU is equal to the aggregate of duties of customs leviable on like goods produced or manufactured outside India, if imported into In .....

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payable at the tariff rate. In appeal proceedings, the Commissioner (Appeals) framed a question for determination as under: - "Whether denial of exemption under to a 100% EOU for payment of duty in terms of proviso to Section 3(1) of Central Excise Act, 1944 on its clearances in DTA, is sustainable." The Commissioner (Appeals) held that the appellants are entitled to avail the exemption under Notification No. 29/2004 and not under Notification No. 30/2004. He accordingly set aside Ord .....

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E/155/2007, the respondent contended that the benefit of Notification No. 30/2004 would be admissible and the proviso to section 5A(1) does not pose a bar as held by the Hon'ble Delhi High Court in the case of Plastic Processors v. Union of India 2002 (143) ELT 521 which is affirmed by the Hon'ble Supreme Court in 2005 (186) ELT A27. 5. Heard both sides and considered the submissions. 6. The facts of the case have been brought out in the above paras. We find that the central issue is whe .....

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, excisable goods of any specified description from the whole or any part of the duty of excise leviable thereon: Provided that, unless specifically provided in such notification, no exemption therein shall apply to 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 place in India." 6.1 Duties of Central Excise are levied .....

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ed or manufactured in India. Prima facie, the CVD in the present case would be equal to the duty leviable under Notification No. 29/2004 or 30/2004 as may be applicable. The objection raised by the Revenue is that the benefit of this Notification will not be applicable in view of the proviso to Section 5A(1) of the Central Excise Act, which is reproduced above. We find that there has been total mis-appreciation of this provision of law. Section 5A(1) only grants power to exempt excise duty levia .....

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This is so because the duty payable by a 100% EOU is equal to the aggregate of customs duties. In other words, even if excise duty is Nil on a product, the excise duty on a product manufactured by 100% EOU will not be Nil. Such product will still have to bear basic customs duty and cess etc on such customs duty. The duty payable on goods produced and cleared by a 100% EOU is to be seen in terms of provisions of Section 3(1) and while calculating this duty, the CVD component is to be calculated o .....

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n Section 3(1). Our view finds support in the judgment of Hon'ble Delhi High Court in the case of Satya Metals v. Union of India 2013 (290) ELT 514 in which in para 20, it was held that "the proviso to Section 5A of 'Act' cannot be taken as a bar in calculating 'CVD' for the purpose of computing the duties payable by a 100% EOU unit while making DTA clearances, stands settled by the judgment of the Delhi High Court in the case of Plastic Processors (supra) which has expr .....

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