A.R.Stanchem Private Limited Vs Commissioner of Central Excise (CESTAT Kolkata)
CESTAT Kolkata held that 100% EOU for clearance in DTA is entitled for benefit of notification no. 2/2008-CE dated 01.03.2006 for clearance of Linear Alkyl Benzene Sulphuric Acid and notification no. 4/2006-CE dated 01.03.2006 for clearance of Spent Sulphuric Acid.
Facts- The appellant is a 100% Export Oriented Unit (EOU) and is manufacturing Linear Alkyl Benzene Sulphuric Acid (LABSA) falling under Central Excise Tariff No. 34029091 and Spent Sulphuric Acid emerging as a by-product by Heading No. 28070010 out of the inputs i.e. Liner Alkyl Benzene Sulphuric Acid and Spent Sulphuric Acid. In terms of Notification No.2/2008 dated 01.03.2008, the appellant was paying 14% duty ADV. They are clearing Spent Sulphuric Acid to the fertilizer companies, which are exempted from payment of duty in terms of notification no. 4/2006-CE dated 01.03.2006 as amended.
The Revenue is of the view that the said Notifications were issued u/s. 5A (1) of the Central Excise Act, 1944. The proviso to the said Section provides that under exemption of Section 5A shall not apply to excisable goods, which are produced or manufactured by a 100% EOU and brought to any place in India. Therefore, the appellant is not eligible for those exemption Notifications.
Conclusion- Held that in respect of all goods under any Chapter, the Central Government exempts goods from so much of duty of excise leviable thereon is in excess of the amount equal to 50% of the duty leviable under Section 3 of the Central Excise Act, 1944, provided that the duty payable with this Notification in respect of the said goods shall not be less than the duty of excise leviable on the like goods produced and manufactured outside EOU, which is specified in the said schedule read with any other relevant Notification issued under Section 5A(1) of the Central Excise Act, 1944.
Therefore, the duty payable in accordance with this Notification in respect of the said goods shall not be less than the duty of excise leviable on the like goods produced or manufactured outside EOU Unit, which is specified in the said Schedule read with the any other relevant Notification issued u/s. 5A(1) of the Central Excise Act, 1944.
Therefore, held that the appellant is entitled to pay the duty in terms of Notification No.2/2008-CE dated 01.03.2008 and Notification 04/2006-CE dated 01.03.2006.
FULL TEXT OF THE CESTAT KOLKATA ORDER
Both the appeals are having a common issue, therefore, both are disposed off by a common order.
2. The facts of the case are that the appellant is a 100% Export Oriented Unit (EOU) and is manufacturing Linear Alkyl Benzene Sulphuric Acid (LABSA) falling under Central Excise Tariff No.34029091 and Spent Sulphuric Acid emerging as a by-product by Heading 28070010 out of the inputs i.e. Liner Alkyl Benzene Sulphuric Acid and Spent Sulphuric Acid. In terms of Notification No.2/2008 dated 01.03.2008, the appellant was paying 14% duty ADV. They are clearing Spent Sulphuric Acid to the fertilizer companies, which are exempted from payment of duty in terms of notification no. 4/2006-CE dated 01.03.2006 as amended.
2.1 The Revenue is of the view that the said Notifications were issued under Section 5A (1) of the Central Excise Act, 1944. The proviso to the said Section provides that under exemption of Section 5A shall not apply to excisable goods, which are produced or manufactured by a 100% EOU and brought to any place in India. Therefore, the appellant is not eligible for those exemption Notifications.
2.2 The proceedings were initiated against the appellants by issuing show-cause notices to demand differential duty along with interest and to impose penalties on the appellants.
2.3 Against the said order, the appellants are before us.
3. The ld. Counsel for the appellants submits that the duty payable by 100% EOU is covered by the provisions of Section 3(1)(b)(ii) of the Central Excise Act, 1944. In view of the said provisions, duty is to be levied and collected from a 100% EOU would the duty of Customs payable as if the goods produced or manufactured outside India have been imported into India. This is the basic charging section of duty leviable on a 100% EOU when clearing the goods to DTA. The Notification No.23/2003-CE dated 31.03.2003 as amended is applicable to 100% EOU in terms of Sl.No.2 of the table appended to the said notification providing for exemption from payment of duty in excess of the amount equivalent to the aggregate of duty of customs leviable on like goods. Against (a) under Sl.No.2, it has been stated that duty of customs specified in the first schedule to the Customs Tariff Act, 1975 read with any other notification in force was reduced to 50%. Therefore, other notifications also may be considered for the purpose of calculating duty. Further, the aspect to be considered is that in view of the existence of effective rate of duty under Notification No.2/2008-CE dated 01.03.2008, the DTA units would be paying the duty @ 14% and at the same time EOU units cannot be asked to make payment of duty while manufacturing the goods out of raw-materials received from the domestic market at a higher rate. It is something impossible and hence, the relevant notifications in force are required to be considered while clearing the goods by 100% EOU to DTA.
3.1 Further, he submits that with reference to clearance of Spent Sulphuric Acid to the fertilizer companies, the appellant has also eligible for payment of ‘nil’ rate of duty in terms of Notification No. 4/2006-CE dated 01.03.2006, as amended, the exemption would be mutatis mutandis be applicable like Notification No.2/2008-CE dated 01.03.2008.
3.2 He further submits that the above aspect has been cleared on a query from the Revenue in the appellant’s own case including its sister unit, by which, a clarification was sought for as to why the General Exemption No.52A cannot be made available in view of Section 5A of the Central Excise Act, 1944 to the EOU when the DTA units are not paying duty while cleared the goods to the fertilizer companies. The said query was replied. Section 3 of the Central Excise Act, 1944 is the guiding factor for calculating the duty and the restrictions on EOU for applying exemption would render Section 3 of the Central Excise Act redundant.
3.3 He further submits that the CVD shall be paid on importation, which is equal to Excise duty as applicable on the manufactured goods and in that view of the matter, the exemption of Central Excise duty shall also be applicable for computation of the duty on the DTA clearance and thus, there is no bar even in view of restrictions under proviso to Section 5A and the unit will be liable to pay duty based on applicable Customs duty and additional Customs duty in terms of Notification vide Sl.No.32 of Notification No.4/2006 on Sulphuric Acid subject to the condition No.2 of the Annexure to the said Notification. There is no allegation in this case regarding involvement to Condition No.2. Therefore, the question of denying benefit of exemption does not arise.
3.4 He further submits that a letter was issued by the appellants’ sister unit seeking a guidelines mentioned in para 4 of the letter 02.04.2008 issued by the Chief Commissioner of Central Excise, Bombay. In response to the said letter, the Superintendent of Central Excise, Kalyan, has intimated to follow the proper CT-2 Procedure.
3.5 He also refers a Circular No.4/2008-09 dated 22.04.2008 clarifying the position and in the said Circular, it has been made clear that the Notification No.2/2008-CE dated 01.03.2008 would be applicable while making clearance of the goods from EOU to DTA and the nil rate of duty would be applicable in case of clearance of Spent Sulphuric Acid to fertilizer companies.
3.6 It is also submitted that the adjudicating authority in spite of specific statutory provisions mis-interpreted the same and denied the exemption contending that the letter dated 02.04.2008 is in conflict with the statutory provisions and hence, the exemption benefit cannot be extended.
3.7 It is also submitted that the said finding is not maintainable in view of the expressed statutory provisions, which has also been quoted by the Commissioner in his finding. The said provisions would clearly show that the guiding factory for computation of duty of the clearance of the goods by EOU under Section 3(1)(a)(ii) of the Central Excise Act, 1944 and in that view of the matter, the CVD would be payable at the prevailing rate, at which the manufactures of DTA would pay the duty and hence, the appellant would be eligible for the benefit of the said Notifications.
3.8 He relies on the decision of the Hon’ble High Court of Himachal Pradesh in the case of Satya Metals Vs. Union of India reported in 2013 (290) ELT 514 (H.P.).
3.9 He further submits that for the subsequent period, the proceeding against the appellants has been dropped by the adjudicating authority vide order dated 17.03.2021.
3.10 The said order was affirmed by the ld. Commissioner (Appeals) vide its Order dated 07.10.2022
3.11 He, therefore, submits that the impugned proceedings are not sustainable.
4. On the other hand, the ld.A.R. for the Revenue, supported the impugned order.
5. Heard both the parties and considered the submissions.
6. A short issue involved in this matter is that whether the appellant being a 100% EOU for clearance in DTA, is entitled to take the benefit of Notification No.2/2008-CE dated 01.03.2008 for clearance of Linear Alkyl Benzene Sulphuric Acid and Notification No.4/2006-CE dated 03.2006 for clearance of Spent Sulphuric Acid to fertilizer companies, or not ?
7. We find that for the subsequent period, the appellant’s own case, the proceeding has been dropped by the adjudicating authority and the said order has been confirmed by the ld. Commissioner (Appeals), wherein it has been observed as under :
