PARAS FAB INTERNATIONAL Vs. CCE

JUDGEMENT

(1.) IN view of our findings recorded below we stay the recovery of the central excise duty demanded from, and penalty imposed on, M/s. Paras Fab International and take up the Appeal itself for disposal with the consent of both the sides.

(2.) THE issue involved in this Appeal is whether the provisions of Rule 13 of the Central Excise Rules, 1944 are applicable to the appellants, a 100% Export Oriented Undertaking (EOU).

(3.) SHRI L.P. Asthana, learned Advocate, submitted that the appellants have obtained the permission from Development Commissioner, Noida Export Processing Zone and the Deputy Commissioner of Customs under para 9.9(b) of the Export -Import Policy for making sales in the Domestic Tariff Area (DTA) on the payment of applicable duties and takes; that they had cleared to M/s. Janta Textiles goods in DTA under Rule 13 (1) (b) of the Central Excise Rules read with Notification No. 47/94 -CE (NT) dated 22.9.94 on the basis of CT -2 Certificate issued to Janta Textiles for procurement of excisable goods under Chapter X Procedure; that the Commissioner under the impugned order has confirmed the demand of central excise duty and imposed penalty on them holding that the Export -Import Policy and the Central Excise Rules provided for clearance of goods on payment of full duty leviable and, therefore, Notification No. 47/94 was not applicable to the appellants; that it was also held by the Commissioner that said Notification relates to indigenously manufactured goods and not to goods manufactured in a 100% EOU which attract customs duties also and that the permission for DTA sales is not relevant since it did not allow clearance without payment of duty, Learned Advocate further submitted that under paragraph 9.9 (b) of the Exim Policy applicable duties are to be paid; that applicable duties leviable means duty payable under Central Excise Law; that Rule 13 is a part of the Central Excise Rules which provides removal of excisable material without payment of duty for the manufacture of export goods; that Notification No. 47/94 -CE (NT) permits for the purpose of export outside India manufacture in Bond of the export products specified in the Notification provided that the provisions of Chapter X of the Central Excise Rules are followed; that it is not in dispute that the appellant had followed the Chapter X Procedure, He also mentioned that the learned Commissioner has referred to Rule 100A of the Central Excise Rules which provides that in the event of a conflict with the provisions of Chapter VA and other Rules, the provisions contained in Chapter VA shall prevail; that the Commissioner, however, has not brought out what is the conflict between Rule 13 and Rule 100A; that Rule 100A only calls for payment of duty leviable which has to be determined with reference to Central Excise Tariff, Section 3 of the Central Excise Act, the Central Excise Rules; that Rule 100A does not exclude the applicability of Rule 13 in any way; that in the absence of any conflict between Rule 13 and Chapter VA, both the provisions are applicable; that Rule 100H provides for exemption from certain provisions in respect of excisable goods manufactured by a 100% EOU; that Rules 9, 13 and 49 have not been excluded and, therefore, these Rules also apply to excisable goods manufactured by a 100% EOU. He also referred to the Board's Circular No. 314/30/97 -CX dated 6.5.97 wherein it has been clarified that as per the proviso to Rule 9( 1) any clearance of excisable goods from the place of their production (including a 100% EOU) without payment of duty for export shall be under Rule 13; that no doubt the said Circular was considering the scope of the term 'manufacture' in Notification No. 1/95 -CE; that, however, it is apparent from the Circular that the Board recognizes the applicability of Rule 13 to a 100% EOU. Alternatively, the learned Advocate mentioned that as the sales to M/s. Janta Textiles are within permissible limit under para 9.9 (b) of the Policy the applicable duties would be chargeable and not the full duties and the benefit of Notification No. 8/97 -CE dated 1.3.97 will be available to them. Finally, he submitted that there is no justification for imposition of any penalty as the clearance was effected in terms of the permission granted by the Development Commissioner and on the basis of CT -2 Certificate issued by the Excise Department; that further penalty under Rule 173Q of Central Excise Rules, 1944 cannot be imposed as the said Rule is not applicable to a 100% EOU in terms of the provisions of Rule 173A of the Central Excise Rules.