TMI Blog2023 (10) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... iented unit, the rate of duty was Nil as specified in Notification No. 23/2003 dated 31 March, 2003 being General Exemption No. 32 - Also cotton waste being excisable was classified under Heading no. 52.02 under Chapter 52 of the Central Excise Tariff Act 2001-2002 at Nil Page 12 of 17 rate of duty. It thus appears that on clear application of Notification No. 23/2003-CE dated 31 March, 2003 as also Notification No. 52/2003-Cus dated 31 March, 2003, the cotton waste as generated in the assessee s unit and as cleared in the domestic tariff area, although excisable fell under the category of Nil duty. The CESTAT was thus correct in observing that when a manufacturer sets out to produce waste which is only incidentally generated in the process of manufacture of finished goods, the law would regard such waste as excisable goods, however, being exempted by application of notifications as discussed above, which permitted clearance into the domestic tariff area by adhering to the prescribed procedure - Once the notification(s) as discussed hereinabove provided Nil rate of duty in respect of such goods incidentally produced or manufactured by 100% export oriented unit and allowed it to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal dated 23 November, 2020 passed by the Commissioner of Central Excise (Appeals), Mumbai Zone-1. The revenue has proposed the following substantial questions of law for determination of this Court: a) Whether the CESTAT was right in holding that the Respondent-assessee fulfilled the conditions of Exemption Notification No. 23/03-CE dated 31.03.2003 and thus, entitled for exemption? b) Whether the assessee rightly availed exemption under Notification No. 53/97 dated 03.06.1997 Notification No. 52/03- Cus dated 31.03.2003 on the portion of imported Cotton contained in Cotton Waste which is subsequently cleared at NIL rate of duty, under Notification No. 6/97-CE dated 01.03.1997 Notification No. 23/03-CE dated 31.03.2003? Central Excise Appeal No. 29 of 2020 2. The facts of the case lie in a narrow compass, which are as follows - The assessee is a manufacturing unit operating as a 100% Export Oriented Unit (EOU) under the EXIM policy. It was issued a Letter of Permission (LOP) by the jurisdictional Development Commissioner for the manufacture of cotton yarn. 3. The case of the revenue is that during excise audit of the assessee, it was noticed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the duty free goods. The revenue was of the opinion that the existence of nil duty liability situation in DTA does not spontaneously meet or satisfy the condition warranting payment of excise duty in DTA. It was of the opinion that if the article or waste or reject is removed to any place in India outside the 100% EOU it has to be done on payment of duty of excise leviable thereon under section 3 of Central Excise Act, 1944. This is in view of the decision of the Constitution Bench of the Hon ble Supreme Court in Commissioner of Central Excise, Vadodara vs. M/s. Dhiren Chemicals Industries 2002 (139) ELT 3(SC). The revenue thus forming an opinion that when no duty was paid on such resultant article (including rejects, wastes and scrap material arising in the course of manufacture of such articles) owing to the reason that such resultant articles were exempted or were chargeable to duty at NIL rate, the condition on payment of duty of excise leviable thereon under Section 3 of Central Excise Act, 1944 was not satisfied. It is on such premise, a show cause notice dated 11 September, 2007 came to be issued to the assessee to show cause as to why the exemption availed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Excise, Vadodara vs. Dhiren Chemical Industries (supra), which according to the assessee was not relevant in the facts and circumstances of the case. 6. The show cause notice in question was adjudicated by the Assistant Commissioner, Central Excise, Kalyan-II Division by Order-in-Original dated 20 August, 2008, whereunder the duty demand against the assessee came to be confirmed, and an order in regard to payment of interest and penalty was passed against the assessee. The operative part of the Order-in-original reads thus: ORDER (i) I confirm the duty demand amounting to Rs. 1,17,63,618/- (Rupees One Crore Seventeen Lacs Sixty Three Thousand Six Hundred Eighteen Only), payable by the assessee. This amount should be recovered from M/s. Technocraft Industries (India) Ltd. I also order the enforcing of B-17 Bond executed by them for this purpose. (ii) I hereby order the payment of interest at appropriate rate, on the above said amount of Rs. 1,17,63,618/- (Rupees One Crore Seventeen Lacs Sixty Three Thousand Six Hundred Eighteen Only), and order for its recovery from the date of importation/procurement till the date of payment of duty from M/s. Technocraft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law as proposed to be raised, has limited submissions. The primary contention as urged on behalf of the revenue is that the impugned order is cryptic on the issue as to how the decision of the Supreme Court in M/s. Dhiren Chemical Industries (supra) would not be applicable in the facts of the present case, and it is for such reason, the impugned order is required to be set aside and the proceedings remanded to the CESTAT. It is next contended that the CESTAT could not have placed reliance on the decision of the Tribunal in Winsome Yarns Ltd. vs. Commissioner of Central Excise, Chandigarh 2001 (127) ELT 833 (Tri-Del) when the decision of the Supreme Court in M/s. Dhiren Chemical Industries (supra) was squarely applicable. It is next contended that the decision of the Madras High Court in HGL Trading vs. Union of India 2016 (331) ELT 651 (Mad.) also has not been appropriately considered by the CESTAT in allowing the assessee s appeal. 10. On the other hand, learned counsel for the assessee would support the impugned order. She would submit that the contention as urged on behalf of the revenue ought not to be accepted inasmuch as such contentions do not consider that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise Act, 1944 (1 of 1944) (hereinafter referred to as the Central Excise Act), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in column (3) of the Table below, and falling within the Chapter, heading No. or sub-heading No. of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the Central Excise Tariff Act) specified in the corresponding entry in column (2) of the said Table, produced or manufactured in an export oriented undertaking or an Electronic Hardware Technology Park (EHTP) Unit or a Software Technology Park (STP) Unit and brought to any other place in India in accordance with the provisions of (Foreign Trade Policy) and subject to the relevant conditions specified in the Annexure to this notification, and referred to in the corresponding entry in column (5) of the said Table, from so much of the duty of excise leviable thereon under Section 3 of the Central Excise Act as specified in the corresponding entry in column (4) of the said Table. Sr.No. Chapter or heading No. sub-headin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and such finished goods and services (including by-products, rejects, waste and scrap arising in the course of production, manufacture, processing or packaging of such goods) even if not exported, are allowed to be sold in Domestic Tariff Area in accordance with the Foreign Trade Policy and subject to such other limitations and conditions as may be specified in this behalf by Development Commissioner or the Board of Approval or the Inter Ministerial Standing Committee, as the case may be, on payment of applicable duty of excise leviable thereon under section 3 of the Central Excise Act, 1944 (1 of 1944) or where such finished goods (including by-products, rejects, waste and scrap) or services are cleared to the warehouse appointed or registered under notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 26/98 Central Excise (N.T.) dated the 15th July, 1998 or No. 46/2001 Central Excise (N.T.) dated the 26th June, 2001 or cleared to the warehouse authorized to carry out manufacturing process or other operation under section 65 of the Customs Act, 1962 (52 of 1962) and under the Manufacture and Other Operations in Warehouse Regulation, or cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect view. 17. We may usefully refer to another decision of the Supreme Court in the case of Collector of Central Excise, Vadodara vs. Dhiren Chemical Industries (2002) 10 SCC 64 rendered on 21 February, 2002 wherein the Supreme Court considering the decision of Constitution Bench in the case of Dhiren Chemicals Industries (supra) thereby clarified that if there were circulars which had been issued by the Central Board of Excise and Customs which placed a different interpretation of the phrase which fell for consideration of the Constitution Bench, namely, on which the appropriate amount of duty of excise has already been paid , such interpretation would be binding on the revenue. The Supreme Court observed thus: The issue involved in these appeals is covered by the decision of a Constitution Bench in CCE vs. Dhiren Chemical Industries . The Constitution Bench interpreted the phrase on which the appropriate amount of duty of excise has already been paid in favour of the revenue. However, it held that regardless of the interpretation placed by it on that phrase, if there were circulars which had been issued by the Central Board of Excise and Customs which placed a dif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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