Customs, Excise and Gold Tribunal - Delhi
Winsome Yarns Ltd. vs Commissioner Of C. Ex. on 27 October, 2000
Equivalent citations: 2001(73)ECC256, 2001(127)ELT833(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The issue involved in the appeal filed by M/s Winsome Yarns Ltd. is whether duties of Customs are chargeable on clearances of cotton waste by 100% export oriented undertaking to the Domestic Tariff Area (DTA).
2. Shri Balbir Singh, ld. Advocate, submitted that Appellants are registered 100% E.O.U. and are engaged in the manufacture of Cotton Yarn; that the cotton waste falling under heading 52.02 of the Schedule to the Central Excise Tariff Act is generated during the manufacture of cotton yarn; that they cleared cotton waste to the Domestic Tariff Area without payment of duty claiming exemption under Notification No. 8/96-C.E., dated 23-7-1996; that a show cause notice dated 4-2-1997 was issued to them for demanding duty for the period from 10-8-1996 to 31-12-1996; the Additional Commissioner under the Adjudication Order No. 89/97 dropped the demand. He further, mentioned that however, on review appeal filed by the Department, the Commissioner (Appeal) under the impugned Order set aside the Adjudication Order and confirmed demand holding that a 100% E.O.U. is to be treated as it exists outside India and if the goods are removed to D.T.A., the duties are to be charged as if the goods are imported into India; that Notification No. 8/96 exempts goods only from the central excise duty and in absence of clear cut exemption from other duties of Customs it cannot be said that notification allows exemption from basic customs duty and special customs duty. He relied upon the decision in the case of Winsome Yarns Ltd v. CCE, 2000 (115) E.L.T. 153 (T). The ld. Advocate submitted that a 100% E.O.U. is liable to pay only central excise duty under Section 3 of the Central Excise Act and the measure of the duty is customs duty; that it has been held by the Larger Bench of the Appellate Tribunal in the case of Vikram Ispat v. CCE Mumbai, 2000 (120) E.L.T. 800 that the clearance of the goods by 100% EOU are not import in the terms in which it has been defined under Section 2(23) of the Customs Act and when the goods are cleared from 100% EOU to any place in India Central Excise Duty is levied and not Customs duty under Customs Act; that nature of the duty levied on the goods cleared by 100% EOU is excise duty and nothing else and in determining the quantum of duty the measure adopted is duty leviable under Customs Act.
3. The ld. Advocate mentioned that Notification No. 8/96-C.E. clearly provides Nil rate of duty in respect of all goods (falling under Heading 52.02) produced or manufactured by a 100% export oriented undertaking and allowed to be sold in India; that accordingly no duty is payable by them; that the decision as reported in 2000 (115) E.L.T. 153 is not applicable to the facts of the present case as the Notification involved therein was 2/95-C.E., dated 4-01-1995 which provided an effective rate of duty to be levied on the goods cleared by 100% E.O.U. We also heard Dr. Ravinder Babu, ld. DR, who reiterated the findings as contained in the impugned Order.
4. We have considered the submissions of both the sides. The 100% E.O.Us, are provided facilities, among other things, of importing capital goods, raw-material, components etc. without payment of customs duty and also of obtaining similar goods from domestic market without payment of Central Excise duty. These units have also been provided facility to sell a specified quantity of their products in Domestic Tariff Area in India. Section 3 of the Central Excise Act provides that the duty of excise shall be an amount equal to the aggregate of the duties of Customs on like goods produced or, manufactured outside India, if imported into India. It is thus apparent that the nature of duty levied on the goods manufactured by the 100% E.O.U. is Central Excise Duty whereas the measure of collection of duty is Custom duty. Section 3 (1) of the Act nowhere provides that in addition to the Central Excise duty which is aggregate of customs duty, the 100% E.O.Us, have to pay separately customs duties also. The measure of collection of duty does not change the nature of duties required to be paid by 100% EOU that is Central Excise Duty if goods are cleared to any other place in India. As Notification No. 8/96 provides Nil rate of duty in respect of all goods produced or manufactured by 100% Export Orinented Undertaking and allowed to be sold in India, no Customs duty under Section 12 of the Customs Act will be leviable thereon. This was the view of the Larger Bench of the Tribunal in the case of Vikram Ispat, supra. The reliance placed by ld. Commissioner (Appeals) on the decision in Winsome Yarns Ltd. supra, is not correct as it was not held by the Tribunal that customs duties are separately leviable on the clearances of the goods effected by 100% E.O.U. The Tribunal mentioned in that case that for "levy of duty, we have not to consult the Central Excise Tariff Act but we have to look at the Customs Tariff Act," as the duty is Excise duty which shall be an amount equal to the aggregate duty of Customs. Even in that decision the Customs Tariff Act provided levy of duty @ 25% on soft waste of cotton but in view of Notification No. 2/95-C.E. dated 4-1-1995, the effective rate of duty was reduced to 12.5%. In the present matter the Notification provides Nil rate of duty and as such no duty is payable by the Appellants on the cotton waste falling under Heading 52.02 of the Central Excise Tariff. Accordingly, we allow appeal filed by the appellant.