Customs, Excise and Gold Tribunal - Delhi
Kurt-O-John Shoe Components (I) Ltd. vs Commr. Of C. Ex. & Cus. on 1 January, 2003
Equivalent citations: 2003(154)ELT651(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The issue involved in this Appeal filed by M/s. Kurt-O-John Shoe Components (I) Ltd. is whether the provisions of Rule 13 of the Central Excise Rules, 1944 are applicable to them being a 100% Export Oriented Undertaking.
2. Shri M. Chandrashekaran, learned Senior Counsel/ submitted that the Appellants, a 100% Export Oriented Unit, manufactures shoe components; that they obtained permission from the Development Commissioner to supply shoe components to specified customers against payment in foreign exchange in terms of Para 9.10(b) of the EXIM Policy subject to certain terms and conditions; that one of the conditions was that the clearances would be allowed on payment of appropriate duties and taxes leviable thereon; that the Assistant Commissioner NOIDA under letter dated 3-10-96 informed that they should follow the Procedure as prescribed under Rule 13(1)(b) of the Central Excise Rules, 1944 for availing the exemption, otherwise full rate of duty would be leviable on such clearances; that the Appellants accordingly, followed the provisions of Rule 13(1)(b) and the procedure prescribed under Notification No. 47/94-NT for supplying the goods to the manufacturer exporters; that the Commissioner, under the impugned Order has demanded the Central Excise duty and imposed equivalent amount of penalty holding that the provisions of Rule 13 stand excluded, to be operative in case of 100% Export Oriented Unit and consequently the exemption in terms of Notification No. 47/94-NT issued under Rule 13 is not applicable to them. Learned Sr. Counsel, further, submitted that the finding of the Commissioner that provisions of Rule 13 are not available, is without any basis or legal provisions; that as the Appellants manufacture excisable goods, all the provisions of Central Excise Act and Rules are applicable to them, unless contrary provision is specified in the Act and the Rules; that Rule 100H(2) grants exemption to 100% Export Oriented Units from various Rules; that even in Rule 100H(2), Rule 13 has not been specified, which goes to indicate that Export Oriented Units are covered by the provisions contained in Rule 13; that there is no provisions in Rule 13 to say that the said Rule is not applicable to 100% Export Oriented Unit; that again, there is no negative clause in Notification No. 47/94 providing that the exemption contained would not apply to 100% Export Oriented Units. The learned Senior Counsel finally, submitted that no doubt, goods are to be removed by 100% Export Oriented Units on payment of appropriate duty leviable thereon which means duty payable under the Central Excise Act and Rules; that Rule 13 is part of the Central Excise Act and Rules which provides export of excisable goods without payment of duty under Bond. Rule 13 also provides removal of excisable material without payment of duty for the manufacture of export goods; that Notification 47/94-NT permits for the purpose of export outside India, the manufacture in Bond of the Export products specified in the Notifications provided that the provisions of Chapter X of the Central Excise Rules are followed; that it is not in dispute that the Appellants had followed the Chapter X Procedure inasmuch as the goods were supplied by them to the manufacturer exporters against proper CT-2 forms.
3. Countering the arguments, Shri A.S. Bedi learned Senior Departmental, Representative, submitted that 100% Export Oriented Units are governed by the provisions contained in Chapter V-A of the Central Excise Rules 1944; that Sub-rule (2) of Rule 100A clearly provides that in case of conflict between provisions of Chapter V-A and the provisions contained in any other Chapter, the provisions of Chapter V-A shall prevail in relation to excisable goods manufactured by 100% Export Oriented Units; that in view of the clear provisions envisaged under the said Chapter, any general provisions will not be operative as the specific provisions prescribed for 100% EOUs will prevail over general provisions; that accordingly provisions of Rule 13 and the notification issued under the said Rule will not be applicable to a 100% Export Oriented Unit. He also relied upon the decision in the case of Indian Aluminium Company Ltd. v. Union of India - 1988 (36) E.L.T. 435 (Calcutta), wherein it has been held that a statutory rule made in exercise of rule making powers by the subordinate legislative Authority, cannot be explained or interpreted contrary to its normal connotation.
4. We have considered the submissions of both the sides. It is not in dispute that the Appellants have removed the goods following the procedure of Chapter X of the Central Excise Rules to manufacturer exporter after obtaining the permissions of the Development Commissioner for clearing their goods in Domestic Tariff Area. The Commissioner has confirmed the demand of duty and imposed penalty on the ground that 100% Export Oriented Units are governed by the provisions contained in Chapter V-A of the rules and Rule 13 being a general rule, will not be applicable to 100% Export Oriented Unit. Rule 13(1)(b) provides that the Central Government may, by notification, specify the material removal of which without payment of duty from the place of manufacture for use in the manufacture in Bond of export goods may be permitted by the Commissioner. The Central Government has issued Notification No. 47/94 (N.T.) dated 22-2-94 permitting the removal of all materials falling under the Central Excise Tariff Act for manufacture of all exported goods provided that provisions of Chapter X of the Rules are followed. We agree with the learned Sr. Counsel that there is nothing in the provisions of Rule 13 and the Notification issued thereunder and in any provisions of Chapter V-A which bars the removal of goods manufactured by a 100% EOU to a manufacturer Exporter without payment of duty on the strength of CT-2 Certificate. This view has been further strengthened by the provisions of Rule 100H of the Central Excise Rules. The said Rule provides that the provisions contained in certain specified Rule such as Rules 43 to 47 shall not apply to excisable goods produced or manufactured by a 100% Export Oriented Undertaking. There is no mention of Rule 13 in Rule 100H at all. We also observe that proviso to Section 5A of the Central Excise Act provides that unless specifically provided in Notification issued under Section 5A no exemption there under shall apply to excisable goods which are produced or manufactured in a 100% Export Oriented Undertaking. Notification No. 47/94 has not been issued under Section 5A of the Act and, therefore, this proviso also is not applicable. Accordingly, we hold that the benefit of Notification No. 47/94 is available to the Appellants. The Appeal is accordingly allowed. Cross Objection is also disposed of in the above terms.