VVF LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellant is in appeal against Order -in -Original confirming demand of Rs. 17,84,45,537/ - with interest and equivalent penalty, demand of Rs. 3,87,92,095/ - with interest and equivalent penalty and demand of recovery of CENVAT credit of Rs. 4,29,58,148/ - with interest and penalties of Rs. 50 lakhs and Rs. 2 lakhs under Rule 25/26(2)(ii) of the Central Excise Rules, 2002. The demands have been issued both for extended period and normal period of limitation. The facts are that the appellants are a 100% EOU and manufacture "Fatty Acids", "Fatty Alcohols" and "Soap Noodles". Apart from export, they also cleared goods in the Domestic Tariff Area (DTA) to third parties as well as to their own units. The clearances into DTA are under concessional rates of duties provided in Notification 23/2003, dated 31 -3 -2003. The goods manufactured and cleared by an EOU into DTA attract levy of Central Excise duty under Section 3 of the Central Excise Act, 1944. Under proviso to Section 3 ibid, the amount of excise duty payable is equal to the aggregate of duties of Customs on like goods imported into India. Therefore, the goods cleared into DTA are leviable to basic customs duty, countervailing duty issued under Section 3(1) of the Customs Tariff Act, 1975 (CTA) and Special Additional Duty (SAD) under Section 3(5) of the Customs Tariff Act, 1975. Apart from these duties, Education Cess and Secondary and Higher Education Cess are also leviable. Notification 23/2003 provides the effective rate of duty in respect of goods cleared by EOU into DTA. The table under the Notification is reproduced below: - -

(2.) HEARD both sides.

(3.) ON the other hand, the learned A.R. vehemently stated that exemption under Notification 23/2003 is not available since sales tax is not leviable on inter -unit transfer and therefore, it cannot be said that the goods are in exemption by the State Govt. from payment of sales tax when the sales tax itself is not leviable. He also relied on the case of Moser Baer India Ltd. v. CCE, Noida -, 2009 (240) E.L.T. 25 (Tri. -Larger Bench of this Tribunal).