ORDER
P.G. Chacko, Member (J)
1. The Department had issued two show-cause notices with corrigenda thereto, to the respondents, who were engaged in the manufacture of “Shrimp Feed” (Heading 23.02 of the CETA Schedule) as a 100% EOU. Under Notification No. 11/97-Cus dated 1.3.97, “Prawn feed” was exempt from payment of import duty. In show-cause notice dated 31.3.99 read with corrigendum thereto, the Department demanded Central Excise duty of over Rs. 68 crores from the respondents by denying them the benefit of the above Notification in respect of “Shrimp feed” cleared to Domestic Tariff Area (DTA) during the period 96-97 to 27th February 1999. It was alleged that the respondents’ product “Shrimp feed” was different from “Prawn feed” and that the benefit of the Notification was admissible to “Prawn feed” only. The second show-cause notice dated 4.10.99 read with corrigendum thereto demanded Central Excise duty of over Rs. 23.5 crores from the respondents for the period 28.2.1999 to 31.8.1999 in respect of similar clearances. This show-cause notice proposed to deny the benefit of Notification No. 20/99-Cus dated 28.2.99 (which granted exemption from payment of import duty on “Prawn feed”) to the respondents. In quantifying the demand of duty, this show-cause notice did not grant the benefit of Central Excise Notification No. 2/95, alleging that the DTA clearances made by the respondents during the above period were in excess of 50% of the FOB value of the physical exports of the same period. Under Notification No. 2/95-CE ibid, an EOU was liable to pay only 50% of the duty of excise on DTA clearances equivalent to the duty of customs leviable on like goods (if imported into India) under Section 12 of the Customs Act read with relevant exemption Notification. The Customs Notification relevant to the period covered under the second show-cause notice was Notification No. 20/99 dated 28.2.99 whereunder customs duty was leviable at the rate of 5% together with surcharge thereon at the rate of 10% on “Prawn feed”. The show-cause notice took into account Notification No. 20/99-Cus, but refused to grant the benefit of Central Excise Notification No. 2/95 to the subject product for the period March to August 1999. In the result, duty of excise was demanded on the DTA clearances of “Shrimp feed” for the said period in terms of the proviso to Section 3(1) of the Central Excise Act without giving the benefit of the Central Excise Notification. In adjudication of both the show-cause notices, ld. Commissioner passed the impugned order, wherein the entire demand of duty was dropped.
2. In the present appeal, the Department has no grievance against the dropping of demand of duty for the period 1996-97 to 27.2.1999 covered by the first show-cause notice. The appellant has raised certain grounds against the dropping of demand of duty for the period March to August 1999 and ld. SDR has reiterated these grounds. Ld. Counsel has sought to defend the impugned order on the strength of certain documents including a certificate dated 1.5.2006 of the Development Commissioner, MEPZ, which is to the effect that, for the period 96-97 to 2002-03, the respondents as a 100% EOU had achieved the stipulated export obligation and NFEP as per the relevant Exim Policy provisions. He has also pointed out that the Revenue, in this appeal, has conceded the party’s entitlement to the benefit of Notification No. 20/99-Cus and ld. SDR has not disputed this position.
3. We have examined the records and considered the submissions of both sides. It appears from the impugned order that the issue relevant to the second show-cause notice was not examined by the Commissioner. She examined only the question whether the respondents’ product could claim the benefit of Notification No. 11/97-Cus which was relevant only to the period covered by the first show-cause notice. The question whether the benefit of Notification No. 2/95-CE was admissible to the party in respect of the goods cleared to DTA during the period covered under the second show-cause notice was not considered by ld. Commissioner, though, in the conclusive part of her order, the proceeding initiated in that show-cause notice was also dropped.
4. For the aforesaid reason, we have no option but to remand the case to the lower authority for passing a speaking order in adjudication of the second show-cause notice with corrigendum thereto. We, therefore, set aside the impugned order to the extent it relates to the said show-cause notice and allow this appeal by way of remand for the above purpose. It goes without saying that a reasonable opportunity of being heard shall be given to the respondents.
(Dictated and pronounced in open court)