ORDER
Gowri Shankar, Member (T)
1. Blue Star Ltd., the appellant before us, is engaged in the manufacture of air-conditioning machinery and parts thereof. Some of the air-condition units by utilising the parts manufactured in the same factory were sent by it to 100% export-oriented unit without payment of duty in terms of various Notifications 186/75, 272/79, 238/88, 5/86, 123/81, 398/86 and 237/85. Counsel for the appellant explains that each of these notifications was issued exempting duty from goods supplied to export processing zones. These, to take an example notification 5/86 exempts from duty excisable goods when sent to the Noida Export Processing Zone subject to various conditions among which is the condition that the procedure in Chapter X should be followed. The appellant availed of the exemption contained in Notification 217/86 to the parts that it utilised in the manufacture of such machines that it cleared to these export processing zones. Notice issued to it proposed to deny the exemption in respect of these goods on the ground that one of the conditions subject to which the exemption is available, that the manufacture of final products in relation to the manufacture to which the exempted products are used should not be exempted from duty of excise or chargeable to nil rate. This condition, it was alleged, was not satisfied, since the goods sent to the export processing zones were exempted from duty. The Commissioner, having confirmed the proposal in the notice, imposed penalty on the appellant, and hence the appellant is before us.
2. Counsel for the appellant relies upon the decision of the Tribunal in Bajaj Tempo Ltd. v. CCE – 1994 (69) E.L.T. 122. Bajaj Tempo Ltd. was the manufacturer of motor vehicles. It manufactured in one factory some motor vehicle parts including engines. It utilised some of these parts and engines in its other factory, to which they were sent under Chapter X procedure for manufacture of motor vehicles. It did not pay duty on the parts and engines sent to the other factory, claiming the benefit of exemption contained in Notification 217/86. The department denied the exemption on the ground that the clearances in terms of Chapter X amounted to an exemption from duty and therefore the provisions of the Notification 217/86 would not apply. The Tribunal stated that the question to be asked in such a situation was whether the ultimate final product suffers duty or not, thus the credit at stage 1 is admissible. It proceeded on the footing that the Notification 217/86 was akin to Rule 57F(2). We do not see how this decision helps the case of the appellant. The notifications with which we are concerned are issued in terms of Rule 8(1), specifically granting exemption to goods which are sent to the export processing units. In fact applying the test that the Tribunal laid down in Bajaj Tempo Ltd., since the products sent to the 100% export-oriented units were not liable to duty, the exemption contained in the Notification 217/86 will not apply. We are not able to accept the contention that the Counsel for the appellant makes, that there is really no exemption to the goods because they are not specified or that the exemption is not in the name of the manufacture. The notifications are clear enough that the goods which include the air-conditioning machines manufactured by the appellant when sent to the export-oriented unit are exempted from duty.
3. Counsel for the appellant next relies upon the decision of the Tribunal in Indian Aluminium Co. Ltd. v. CCE -1995 (79) E.L.T. 111. In this decision, the Tribunal had applied the judgment of the Delhi High Court in Hindustan Aluminium Corporation Ltd. v. Superintendent -1981 (8) E.L.T. 642 saying that the goods exported out of India in terms of Rules 12 and 13 are not exempted goods. We are in this case not concerned with the goods exported out of India. We are concerned with the goods sent to a 100% export processing zone, in terms of exemption notifications. We do not think it would be appropriate to apply 100% on the same footing as goods exported. Sending to a 100% export processing zone is only one step towards the process completion of export and cannot by itself conclude that export. We have noted that duty was not paid on the goods sent to the 100% export processing unit. By strictly construing the notification in question, as we are required to do so, the benefit of Notification 217/86 will not be available to parts which were utilised in the manufacture of these machines. To the extent that these aspects were not raised before the Bench and therefore not considered by it, it would not have binding value.
4. However the appellant succeeds on the basis of limitation. The entire demand contained in the notice dated 3-9-1994 for clearances made relates to the clearances made to the extended period of limitation, the basis for invoking the extended period being that the appellant had not disclosed the fact of goods sent to export-oriented unit in the classification list that it filed on 2-4-1990. The appellant had clearly declared its intention to clear air-conditioners of various capacities, in terms of these notifications which we have specified. The fact of proposed clearance of these goods was thus known to the department. Counsel for the appellant further points out that the exemption in this notification was a condition upon the procedure in Chapter X to be followed. This required the appellant to file a CT3 certificate to the proper officer, enclosing a copy of the certificate issued by the receiving factory intimating the appellant, and such application to be assessed. Therefore, each clearance could not have taken place without the knowledge of the officer as to the ultimate destination of the goods and the fact that they were cleared without payment of duty in terms of the exemption notification which was specified in the application. None of these aspects has been dealt with in the order impugned before us. The department therefore could not have been better informed that has been done in this case. The extended period of limitation therefore will not be available.
5. The appeal is accordingly allowed and the impugned order set aside. Consequential relief.