PLASTIC PROCESSORS Vs. UNION OF INDIA

JUDGEMENT

(1.) In these three writ petitions challenge is to the legality of circular dated 10th May, 2000 issued by the Government of India, Ministry of Finance, Department of Revenue. The same is purported to have issued to clarify doubt which has been raised regarding levy of additional duty of customs (CVD) on Domestic Traffic Area (in short DTA) sale of reprocessed plastic agglomerate/granules (reprocessed out of plastic scrap) by Export Oriented Units (in short EOU)/Export Processing Zone (in Short EPZ) units. Doubts were entertained in respect of the notification No. 5/98-CE dated 2nd June, 1998, 5/99-CE dated 28the February, 1999 and 6/2000-CE dated 1st March, 2000. In paragraph 3 of the circular it was inter alia staled as follows:

(2.) Petitioners are EOUs located in NOIDA EPZ, engaged in manufacture of plastic granules out of plastic scrap. Stand of the petitioners in each case is that view expressed by the authorities in the aforesaid circular is clearly untenable. In the counter affidavits filed it has been stated that scheme of EPZ/EOU has been formulated by Government of India to boost exports and provide international competitive environment to the exporting units. Under the scheme supplies from EPZ units into DTA despite being supplies within India have to be considered as import into India. Likewise supplies from one EOU to another EPZ unit has been defined as "deemed export". The zones in spite of being located in India have been deemed to be enclaves outside India. Accordingly special provisions have been made in Central Excise Act, 1944 (in short the Act) and Customs Act 1962, (in short Customs Act), amongst these special provisions is the first proviso to Section 3 (1) of the Act.

(3.) . In order to appreciate rival submissions a few factual aspects have to be noted. Petitioners are paying duty in respect of the goods sold in DTA. They are also paying additional duty which is known as CVD under Section 3 of the Customs Tariff Act, 1975 (in short Tariff Act), which is equivalent of the Excise duty for the time being leviable on a like article if produced or manufactured in India. Serial number 63 of Exemption Notification .No. 66, which is relevant for the present dispute, reads as follows: