(1.) THE appellants are a 100% Export -Oriented Undertaking (EOU) manufacturing Polyester Chips and PET Preforms falling under Chapter 39 of the Schedule to the Central Excise Tariff Act, 1985. During the period February 2000 to January, 2001, [hereinafter referred to as the period of demand (POD)] they cleared on payment of duty certain quantities of the said products to the Domestic Tariff Area (DTA) on the strength of the permission granted by the Development Commissioner. In making the payment of duty, the appellants, purporting to act in accordance with the terms of Notification No. 2/95 -C.E., dated 4 -1 -1995 (as it stood during the POD), calculated the amount of duty in accordance with the procedure laid down in the C.B.E.C. Circular F. No. 512/91/93 -Cus.VI, dated 18 -5 -94. The Department objected to this calculation and, by show cause notice dated 1 -3 -2001, directed the appellants to show cause why differential amount of Rs. 1,20,51,806/ - should not be paid on the goods cleared into DTA during the aforesaid period. This demand of differential amount of duty, obviously, resulted from the Department's view that the correct method of calculation of the duty of excise to be paid by 100% EOU on goods cleared to DTA for the aforesaid period was as laid down by the C.B.E.C. in Circular No. 7/2001 -Cus., dated 6 -2 -2001 which superseded the circular dated 18 -5 -94. The appellants contested the Department's view by submitting inter alia that the circular dated 6 -2 -2001 had no retrospective effect. The Original Authority, in adjudication of the dispute, confirmed the demand of duty, which has been affirmed by the lower appellate authority. Hence this appeal of the assessee before us.
(2.) EXAMINED the records. Though, in the show -cause notice, there was no reference to any circular of the Board, the Adjudicating authority examined the issue before it in the light of the Board Circular No. 7/2001 -Cus., dated 6 -2 -2001 and gave retrospective effect to the provisions of that circular so as to cover the period of demand of duty. In giving retrospective effect to the provisions of the circular, the Adjudicating authority relied on the amendment brought to Section 11A of the Central Excise Act by the Finance Act, 2000. The lower appellate authority, it appears, looked more closely into the question as to which of the two circulars of the Board provided the correct method of calculation of duty of excise. Having regard to the provisions of Section 3(1) of the Central Excise Act and Notification No. 2/95 -C.E., dated 4 -1 -95 (as it stood during the POD) and after considering the judgment of the Hon'ble Supreme Court in the case of Hyderabad Industries Ltd. v. Union of India reported in 1999 (108) E.L.T. 321 (S.C.), the learned Commissioner (Appeals) came to the conclusion that the Board's circular dated 6 -2 -2001 provided the correct method of calculation of duty. Like the original authority, he also held that the demand of duty was within the prescribed time limits.
(3.) THE learned Advocate Shri V. Sridharan and the learned DR for the Revenue have argued extensively on the interpretation of Notification No. 2/95 -C.E., (as it stood during the POD). We shall consider these as we progress in our discussion of the case. Under the proviso to Sub -section (1) of Section 3 of the Central Excise Act, 1944, the duty of excise leviable on any excisable goods manufactured by a 100% EOU and cleared to DTA shall be an amount equal to the aggregate of duties of customs which would be leviable under the Customs Act, 1962 or any other law for the time being in force, on like goods produced or manufactured outside India, if imported into India. Notification No 2/95 -C.E., dated 4 -1 -1995 (as it stood during the POD) exempted such excisable goods (manufactured by 100% EOU and cleared to DTA) from so much of the duty of excise leviable thereon under Section 3 of the Central Excise Act as was in excess of the amount equal to 50% of each of the duties of customs which would be leviable under the Customs Act, 1962 or under any other law for the time being in force read with any notification for the time being in force in respect of the duties so chargeable on the like goods produced or manufactured outside India, if imported into India. An extract of the relevant part of the notification is given below : -