ORDER
S.S. Sekhon, Member (T)
1. The appellant No. 1, i.e. M/s. Suresh Synthetics are a 100% EOU. They have been clearing goods manufactured in the EOU under the provisions of Para 9.10(b) of the EXIM Policy during the period July-August, 2000. They have appealed against the demand of duty of excise under Section 3 read with Section 11A(2) of the Central Excise Act, 1944 and a penalty imposed under Rule 209A of the Central Excise Rules, 1944. Appellant No. 2 is Director of appellant No. 1 on whom penalty under Rule 209A has been imposed, in the same common order passed by Commissioner of Central Excise, Surat. M/s. Honest Agency, appellant No. 3, is the purchaser of goods from appellant No. 1 on whom a penalty has been imposed under Rule 209A.
2. After hearing the stay applications it transpires that final orders could be passed in these appeals and the matter disposed off, since the issue lies in a very small compass. After waiving pre-deposit and with the consent of both sides this order is being passed.
3. We find : –
(a) The scope of levy of duty under first proviso of Section 3 of Central Excise Act, 1944 at the relevant time, which reads as under : - "Provided that the duties of excise which shall be levied and collected on any excisable goods which are produced or manufactured, - (i) in a free trade zone and brought to any other place in India; or (ii) by a hundred per cent export-oriented undertaking and allowed to be sold in India," in the case of 100% Export-Oriented Unit i.e. an EOU has been considered by the Tribunal in the case of Kuntal Granites Pvt. Ltd. [2001 (132) E.L.T. 214] to be restricted. (b) In the present case, the clearances have not been made under Para applicable for goods allowed to be sold in India i.e. (DTA) sale quota of Para 9.9(b) of the EXIM Policy. Therefore, the present goods, which cannot be covered under or are not sales of goods allowed to be sold in India within DTA sale quota under this para, but are supplies permissible and made under Para 9.10(b) of the EXIM Policy, cannot be equated with or and covered under the terms 'allowed to be sold'. When the law as laid by the Supreme Court in its decision in the case of SIV Industries Ltd. v. CCE [2000 (117) E.L.T. 281], especially the observations, as underlined by us in Para 18 thereof, which reads as follows is considered : -
“18. Contention of the Revenue is that permission to withdraw from scheme is itself a permission to sell in India, i.e., when unit is permitted to debond, it would be deemed to have been permitted to sell the goods in India. But then permission to sell in India has to be in terms or in accordance with the provisions of the export-import policy. Permission to sell in India by 100% EOU consists of all those factors like value addition, fulfilment of export obligation, sale of a general currency licence holder, item being not mentioned in the negative list and then there being a limit of 25%, etc. When permission to debond is given, none of these criteria or aspects are applied by Board of Approvals (BOA) to the closing stock of finished goods. Board of Approvals is a statutory authority, which permits debonding. It is created under the Industrial (Development and Regulation) Act. [On the other hand, permission to sell the goods in India under and in accordance with the import policy has to he given by the Development Commissioner in the Ministry of Commerce. Board of Approvals and the Development Commissioner are two different authorities constituted for two different purposes. Permission to debond is a statutory function exercised by one statutory authority. On the other hand, permission to sell in India is to be exercised by different statutory authority]. If reference is made to para 102 of the relevant import-export policy permission of the Development Commissioner’s required for selling the goods in India up to limit of 25% by 100% EOU. Para 117 of the policy deals with debonding of 100% EOU. Thus, it is apparent that debonding and permission to sell in India are two different things having no connection with each other. It also becomes apparent that in view of the EOU Scheme as modified from time to time and corresponding amendments to Section 3 of the Act the expression “allowed to be sold in India” in proviso to Section 3(1) of the Act is applicable only to sales made up to 25% of production by 100% EOU in DTA, and with permission the Development Commissioner. No permission is required to sell goods manufactured by 100% EOU lying with it at the time approval is granted to debond. ”
(Underlining supplied) (c)
(c) The show cause notice in Para 2 thereof alleges: –
“……..Therefore only these goods which were manufactured and cleared in DTA by 100% EOU in accordance with Paras 9.9 and 9.2 of EXIM Policy were allowed to be sold in India (DTA) on payment of duty of excise and and not the goods released in accordance with para 9.10 of EXIM Policy.”
(Emphasis supplied)
this view of that fact, it is the case of the revenue itself, also that goods cleared in accordance with Para 9.10 of EXIM Policy are not goods allowed to be sold in India (DTA) on payment of duty.
(d) We find that Notification No. 125/84 also uses the same term viz., 'allowed to be sold in India' and the same understanding and meaning of this term is required to be interpreted as laid down by the Apex Court and Union of India in the SIV Industries case (supra). (e) The argument of the ld. Consultant for the appellants that the decision of the Apex Court in the case of SIV Industries was not considered by the ld. Commissioner in the impugned order, even though that was relied upon by the Consultant during the personal hearing and the ld. Consultant had also made a grievance that benefit of Notification No. 125/84-CX which uses the same term viz., 'allowed to be sold in India' and the understanding and meaning of this term used in that Notification was required to be examined and the rates of nil duty as per this Notification were required to be granted for supplies made to India since the supplies were different from goods allowed to be sold as per the EXIM Policy paras was not considered, has merits. This was required to be considered. We also find that the reliance of the Consultant on the case of Treasure Tech Electronics Ltd. [2003 (153) E.L.T. 71 (T) = 2002 (53) RLT 900] for the submission that even if it was to be held that there was a levy on the goods supplied under the provisions of Para 9.10(b) of EXIM Policy, then that levy has to be Central Excise Duty under the main Section 3 of the Central Excise Act, 1944 as per Board's Circular No. 618/9/2002-CX, dated 13-2-2002, and this matter has to be remanded back to redetermine the duty in terms of this Board Circular and the Tribunal's decision is well founded and has to be considered. (f) We find force in the submission of the ld. Consultant as regards the application of the binding nature of Board's Circular on the subject of levy of excise duty under main Section 3 of rules, which are not covered by the term 'allowed to be sold'. The applicability of this Circular and determination of duty of Central Excise, as per Notification No. 125/84-CX is also required to be redetermined and for that purpose this order is required to be set aside and remitted back to the original authority for such re-determination. (g) Only after duty demands, if any, are re-determined, the question of penalties and their quantification will arise. Consequently, the appeals as regards the penalties imposed are also required to be allowed as remand.
4. In view of our findings the order is set aside and the matters are remitted back to the Commissioner to determine the levy, if any, of duty, as per Notification No. 125/84-CX, to the goods in question. Thereafter the quantum of penalty, if any could be determined. The appeals are allowed as remand in above terms.