ORDER
V.K. Agrawal, Member (T)
1. The issue involved in this appeal/filed by M/s. Autolite (India) Ltd., relates to the manner of computing the duty in terms of Notification No. 2/95-CE, dated 4.1.95.
2. Shri K.K. Anand, learned Advocate, submitted that the Appellants, a hundred percent Export Oriented Undertaking (EOU), manufacture halogen bulbs which they were permitted to clear into Domestic Tariff Area (DTA) subject to the conditions specified in Notification No. 2/95-CE dated 4.1.1995; that this Notification exempts all excisable goods manufactured in a 100% EOU and allowed to be sold in India from so much of the duty of excise as is in excess of the amount calculated at the rate of fifty percent of each of the duties of customs, which would be leviable under Section 12 of the Customs Act on the like goods manufactured outside India if imported into India; that the demand of duty has been confirmed on the ground that they were required to work out the duty liability first and thereafter 50% of the amount of each duty should have been taken together in view of Board’s Circular No. 7/2001-Cus dated 6.2.2001. The learned Advocate, further, submitted that the period involved in the present matter is from March 2000 to 28.2.2001 when the Notification No. 2/95-CE exempted the impugned goods “from so much of the duty of excise … as is in excess of the amount calculated at the rate of fifty percent of each of the duties of customs…..”, that after this Notification was amended by Notification No. 11/2000-CE, dated 1.3.2002, the relevant portion reads as follows: “amount equivalent to 50% of the aggregate of the duties of customs”; that after this amendment the method of calculation as prescribed by the Board in Circular dated 6.2.2001 was compatible with Proviso to Section 3(1) of the Central Excise Act; that, however, during the material period, the terms of the Notification were at variance with those of Proviso; that the Board vide Circular dated 18.5.94 provided a method of computation of the duty to be paid by 100% EOU; that the said method was adopted by them for the period of demand; that Board’s Circular dated 6.2.2001 cannot have retrospective effect and the applicable method of computation of duty should be the one laid down by the Board in Circular dated 18.5.94. Reliance has been placed on the decision in the case of Futura Polymers Ltd. v. CCE, Chennai, 2003 (86) ECC 375 (T): 2003 (152) ELT 156 (T).
3. Countering the arguments, Shri P.M. Rao, learned DR, submitted that after the amendment of Notification No. 2/95-CE by Notification No. 38/99-CE, dated 16.9.99, the Board has issued a Circular F. No. 345/12/99-TRU dated 24.9.99 wherein also the method of computation was illustrate; that the said Circular should be followed for the purpose of calculating the duty.
4. We have considered by submissions of both the sides. At the material time Notification-No. 2/95 as amended by 38/99-CE dated 16.9.99 read as under:
“In exercise of the powers conferred by Sub-section (1) of Section 5A of the Central Excise Act…… the Central Government….. hereby exempts all excisable goods ……. produced or manufactured in a hundred per cent export oriented undertaking ……and allowed to be sold in India …………… from so much of the duty of Excise leviable thereon under Section 3 of the said Central Excise Act as is in excess of the amount calculated at the rate of 50% of each of the duties of customs, which would be leviable under the Customs Act, 1962 (52 of 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 duly so chargeable on the like goods produced or manufactured outside India, if imported into India.”
5. A perusal of the notification reveals that it exempted excisable goods cleared by a 100% E.O.U. to DTA from so much of the duty of Excise as is in excess of the amount calculated @ 50% of each of the duties of Customs. The exemption is thus available up to the extent of 50% of each of the duties of customs and it does not speak of exemption from payment of so much of the duty of excise as is in excess of the amount equal to 50% of the aggregate of the duties of customs. Such wordings were substituted in Notification No. 2/95 only by amending Notification No. 11/2002-CE dated 1.3.2002. Use of word “each” before the duties of customs is very relevant. This signifies that every duty has to be worked out which is not in excess of 50% of the duty leviable under the respective enactment. This was the reason the Central Government itself clarified under Circular dated 18.5.94 that “the effective or the collectable basic duty/auxiliary duty in terms of the said exemption notification would be the 50% of such basic duties/auxiliary duties normally leviable. For computing the value for the purpose of determining the Additional Customs duty under Section 3 of the Customs Tariff Act, 1975, the effective chargeable basic duty/auxiliary duty is to be added to the value of the goods imported in terms of Section 14 of the Customs Act, 1962.” The method of calculation followed by both the lower authorities is not correct in view of the specific wordings in the Notification No. 2/95-CE. The Circular No. 7/2001-Cus dated 6.2.2001 has made reference to Section 3(1) of the Central Excise Act which provides that the duty of excise leviable on excisable goods produced or manufactured by 100% EOUs and brought to any other place in India shall be an amount equal to the aggregate of the duties of Customs which would be leviable under Section 12 of the Customs Act or any other law for the time being in force on like goods produced or manufactured outside India, if imported into India. No doubt Section 3(1) mentions the amount equal to the aggregate of the duties of customs which is not used in Notification No. 2/95-CE at the relevant time. Sub-section (3) of Section 5A of Central Excise Act, which empowers the Central Government to exempt goods from payment of duty, provides that exemption may be granted by providing for the levy of duty at a rate expressed in a form or method different from the form or method in which the statutory duty is leviable. In view of the specific wordings of the Notification No. 2/95 the method of calculation of duty adopted by the Revenue is not correct. This was the view expressed by the Tribunal in the case of Futura Polymers Ltd. (supra) wherein it has been held that by Circular dated 6.2.2001, “the Board, for the first time, provided a method of computation of duty which matched the terms of the proviso” of Section 3(1) of the Central Excise Act but “consistency with the proviso, incidentally meant inconsistency with the notification. This inconsistency was, later on, removed by the 1.3.2002 amendment of the Notification”. We also observe that Notification No. 38/99 which amended Notification No. 2/95 did not make any amendment in the phrase “as is in cases of amount calculated @ 50% of each of the duty of customs.” The amendment effected in 1999 was only to the effect that for the words figures and brackets “leviable under Section 12 of the Customs Act, 1962 (52 of 1962) read with any other notification for the time being in force issued under Sub-section (1) of Section 25 of the said Customs Act.”, the words figures and brackets “leviable under the Customs Act, 1962 (52 of 62) 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 duty so chargeable.” This amendment was made in the notification in the light of the decision of the Supreme Court in the case of M/s. Hyderabad Industries, 1999 (64) ECC 153 (SC) : 1999 (108) ELT 321 wherein it was held that charging section for the additional duty of customs is Section 3(1) of the Customs Tariff Act and is not Section 12 of the Customs Act. Thus, this Notification No. 38/99 has also not made any change as far as method of calculation of duty is concerned. We, therefore, allow the appeal filed by the Appellants.