TMI Blog2002 (8) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... EOU. The company is engaged in the manufacture of polished granite slabs and tiles. During the course of physical stock verification by the officers of the customs on 10-7-99, 592.675 sq. mts. of polished granite slabs and tiles manufactured by the company were found to be short, when compared with entries in RG-1 register and a panchnama to this effect was drawn on the spot. The authorised signatory of the company namely Pratap Singh Kamat also admitted this fact in his statement recorded on the spot. He admitted the sale of goods to the relatives of the company during the last few days in domestic area without the cover of the invoice without the payment of excise duty. He further stated that the company was under the impression that sale up to the value of Rs. 509 lakhs in the DTA, by them, being 100% EOU, was exempt from duty. Show cause notice after completion of the investigation, was served on the company and its authorised signatory Pratap Singh Kamat, as well as on Kewal Chand Kothari and Ghinsu Lal Kothari, Directors of the company, vide which the duty demand raised was of Rs. 8,73,131/- under Section 11A of the Central Excise Act. Penalty was also proposed to be imposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 3(1) proviso to (ii) (ibid) cannot be invoked and duty etc. can only be realized in terms of the provisions of the Customs Act, 1962 as laid down in the aforesaid decisions. Hence, the duty demand is set aside. As the provisions of Section 3 (ibid) and Rules 100A to 100H and Rule 173A (ibid) would apply to Central Excise levy and control only on such goods which are allowed to be sold in India, the same would not apply to other goods manufactured/removed to which provisions of Chapter IX of the Customs Act, 1962 and specially Sections 9, 61 and 65 only would apply [Para 5(a) of Kuntal Granites refers], the penalty/interest provisions invoked are also illegal and are set aside except to the extent mentioned below". 5.The Counsel for the company-assessee has, before us, reiterated the law laid down in the above referred cases and the correctness of the impugned order-in-appeal passed by the Commissioner (Appeals). According to the Counsel, the proviso appended to Section 3 of the Central Excise Act, is not attracted to the present case as the goods were removed by the company a 100% EOU, without permission of the competent authority. No central excise duty, according t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duties of customs which would be leviable under Section 12 of the Customs Act, 1962 (52 of 1962), 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 in any other provision of this Act, be determined in accordance with the provisions of Customs Act, 1962 (52 of 1962) and the Customs Tariff Act, 1975 (51 of 1975)". 9.The interpretation of the expression "allowed to be sold in India" in proviso to Section 3(1) of the Central Excise Act, came up before the Apex Court in SIV Industries Ltd. v. CCE - 2000 (117) E.L.T. 281 (supra), for determining the rate of duty on the goods removed by 100% EOU unit after debonding of the unit. In that case, the appellant SIV Industries was a 100% EOU. They later on sought permission to withdraw from 100% EOU scheme and the Ministry accorded the necessary permission. Some goods were lying in that unit at that time and those were removed after debonding. The dispute arose regarding the rate of duty payable on those goods. The plea taken by the manufacturers was that they w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en impliedly granted to such a unit, in the proviso to Section 3(1) of the Central Excise Act. The proviso does not confer any such right on a 100% EOU. Rather, Apex Court in Agricultural Processed Food Products v. Oswal Agro Furane Ltd. - 1996 (85) E.L.T. 3 (S.C.), has observed as under :- "Exemption from excise duty in respect of goods produced by a 100% Export Oriented Unit and "allowed to be sold in India" would not be available where such goods cleared into domestic tariff area without requisite permission from competent authority". 11.The above observations of the Apex Court provide complete answer to the nature of duty payable by a 100% EOU, where the goods had been sold by such a unit, without permission of the proper authority. Therefore, in the instant case, the company is liable to pay excise duty under the main Section 3(1) of the Central Excise Act, for having removed the goods in D.T.A, without permission of the competent authority. 12.The observations of the Larger Bench of the Tribunal in Vikram Ispat v. CCE, Mumbai-III - 2000 (120) E.L.T. 800, can also be read with advantage in this case. Though, the question involved in that case was regarding the quantum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pex Court had held that "proviso to Section 3(1) regarding the duty chargeable on goods cleared by EOUs shall be applicable only to sales made in DTA up to 25% of production which are allowed to be sold into India as per provisions of EXIM Policy". In other words, Hon'ble Court decided that if the goods are "not allowed" to be sold in India, the proviso to Section 3(1) of the Central Excise Act, 1944 shall not be applicable. The expression "allowed to be sold" has since been replaced with "brought to any other place" w.e.f. 11-5-2001 vide Section 120 of Finance Act, 2001(14 of 2001). It has come to the2. notice of the Board that field formations are interpreting the judgment of Apex Court to the effect that if the goods cleared by EOUs are not allowed to be sold into India, the Section 3(1) of Central Excise Act, 1944 is not applicable and duty can be demanded under the provisions of Customs Act, 1962 only. Board has taken a serious view of this mis-interpretation. The provisions of Central Excise Act, 1944 shall apply to all goods manufactured or produced in India for which Section 3 is the charging section. EOUs are also situated in India and the chargeability under Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise, Bombay against CEGAT Order No. 785/97-D, dated 14-8-1997 (Shah Granites Pvt. Ltd. v. Collector) and as such, no duty whatever even under Section 3(1) of the Excise Act, can be claimed from them. But, in our view, this contention of the Counsel is wholly mis-conceived and not liable to be accepted. No such plea that their activity of manufacturing polished granite slabs and tiles from the indigenous raw materials i.e. granite blocks had not been taken by the company-assessee before the adjudicating authority. Therefore, for the first time, this plea cannot be allowed to be raised in appeal before us. 17.The authorised signatory of the company admitted the removal of the goods in DTA without permission and without payment of duty. His subsequent retraction from that admission could not be given any weight being after thought. What was in fact disputed before the Commissioner (Appeals) was that duty payable by the company was under the Customs Act and not the Central Excise Act, being 100% EOU and relied upon the law laid down by the Apex Court and the Tribunal in the above referred cases. The Apex Court while dismissing Revenue's Civil Appeal No. 3145 of 1998 [2001 (134) E.L.T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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