HCL TECHNOLOGIES LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THE applicant is a 100% EOU. They manufactured "Special Test Equipment" which could intercept, monitor and selectively block GSM mobile communications. This equipment was supplied by the applicant to Defence Electronic Research Laboratory. They did not pay any excise duty. They had indicated that they were claiming exemption under Notification No. , dated 1 -3 -1997 for the purpose of CVD payable under Section 3(3) of Customs Tariff Act, 1975. Revenue was of the view that this notification issued under Section 5A(1) of Central Excise Act, 1944 would not apply to clearances from the factory of the appellant which was a 100% EOU. For this Revenue was relying on the proviso (i) under Section 5A(1) and proviso (ii) under Section 3(1) of the Central Excise Act. Based on such argument Revenue sought to deny the exemption claimed by the applicant on the clearances of the goods. After adjudication, there is a demand of Rs. 62,81,173/ - confirmed against the applicant along with interest and equal penalty. Aggrieved by the order, the applicant has filed this appeal along with stay petition. The learned Counsel for the applicant submits that the show cause notice was issued after the applicant filed the ER -2 return, though they admit that there was a delay in filing of the ER -2 return. The point that the Advocate for applicant wants to make is that in the ER -2 return, they had claimed classification of the goods under Heading 9030 40 00 and there was no proposal in the show cause notice to revise such classification. He points out that in spite of the said position the adjudicating authority has classified the goods under Heading 8527 99 00, thus acting beyond the scope of the show cause notice. If the goods are classifiable under heading as claimed by the applicant, the rate of Basic Customs Duty payable was 'nil'.

(2.) WITH regard to the claim for Notification 10/97 -C.E., the learned Counsel for the applicant submits that the bar in Section 5A(1) of Central Excise Act is on claiming the exemption from the aggregate duties of Customs as determined under proviso (ii) of Section 3(1) of the Central Excise Act, 1944. He submits that as per proviso to Section 3(1), the excise duty payable on goods cleared from 100% EOU is the "aggregate of duties of customs which would be leviable under the Customs Act, 1962 (52 of 1962) or any other law for the time being in force on like goods produced or manufactured outside India if imported into India". Since on goods imported into India, CVD under Section 3(3) of Customs Tariff Act, 1975 is calculated by extending benefit of notifications like 10/97 -C.E. issued under Section 5A such benefit for purpose of calculating CVD component in aggregate duties of customs will be available to them. The ban in the proviso to Section 5A(1) is on availing exemption from such aggregate duties of customs and not for the purpose of calculating the CVD component payable on like goods when imported into India. Thus the argument is that for the purpose of calculating CVD duty under Section 3(3) of Customs Tariff Act payable by an EOU, Notification No. 10/97 -C.E. will apply as in the case of any importer of such goods importing goods into India from outside India. Advocate already argued that basic customs duty was nil if goods were classifiable under Heading 90 30 40 00 as claimed by them in their ER -2 return which classification has been ordered to be revised without notice to them.

(3.) OPPOSING the prayer, the learned Authorized Representative for the Revenue submits that 100% EOU is a separate entity and separate legal provisions are applicable for them. The proviso in Section 5A(1) is to the effect that any notification issued in exercise of power under Section 5A(1) will not be applicable to any goods cleared from 100% EOU unless it is specifically mentioned in the notification to be applicable to goods cleared from 100% EOU. In the case of Notification No. , there is no specific mention. Therefore, such notification should not be applied at any stage of calculation, be it for calculating the CVD component in aggregate duties of Customs or be it for availing exemption from such aggregate duties of customs levied as excise duty. In this regard, she relies on Section 5A(1) which reads as under: -