JUDGMENT
V.K. Agrawal, Member (T)
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.
4. Countering the argument Shri V. Valte, learned SDR submitted that 100% EOU are governed by the provisions contained in Chapter VA of the Central Excise Rules, 1944; that Sub-rule (2) of Rule 100A clearly provides that in case of conflict between provisions of Chapter VA and the provisions contained in any other Chapter, the provisions of Chapter VA shall prevail in relation to excisable goods manufactured by 100% EOU; that in view of the clear provisions envisaged under the said Chapter, any general provisions will not be operative as the specific provisions prescribed for 100% EOUs will prevail over general provisions; that accordingly, provisions of Rule 13 and the notification issued under the said Rule will not be applicable to a 100% EOU. He also relied upon the decision in the case of Indian Aluminium Company Ltd. v. UOI, 1988 (36) ELT 435 (Cal), wherein it has been held that a statutory Rule made in exercise of Rule making powers by the Subordinate Legislative Authority, cannot be explained or interpreted to its normal connotation.
5. We have considered the submissions of both the sides. It is not in dispute that the appellants have removed the goods following the procedures of Chapter X of the Central Excise Rules to manufacturer exporter after obtaining the permissions of the Development Commissioner for clearing their goods in DTA. The Commissioner has confirmed the demand of duty and imposed penalty on the ground that 100% EOU are governed by the provisions contained in Chapter VA of the Rules and Rule 13 being a general rule, will not be applicable to 100% EOU. Rule 13(1)(b) provides that the Central Government may, by notification, specify the material removal of which without payment of duty from the place of manufacture for use in the manufacture in Bond of Export goods may be permitted by the Commissioner. The Central Govt. has issued Notification No. 47/94 NT dated 22.2.94 permitting the removal of all materials falling under the CETA for manufacture of all exported goods provided that provisions of Chapter X of the Rules are followed. We agree with the learned Counsel that there is nothing in the provisions of Rule 13 and the Notification issued thereunder and in any provisions of Chapter VA which bars the removal of goods manufactured by a 100% EOU to a manufacturer Exporter without payment of duty on the strength of CT-2 Certificate, This view has been further strengthened by the provisions of Rule 100H of the Central Excise Rules. The said Rule provides that the provisions contained in certain specified Rule such as Rules 43 to 47 shall not apply to excisable goods produced or manufactured by a 100% EOU. There is no mention of Rule 13 in Rule 100H at all. We also observe that proviso to Section 5A of the Central Excise Act provides that unless specifically provided in Notification issued under Section 5A, no exemption thereunder shall apply to excisable goods which are produced or manufactured in a 100% EOU. Notification No. 47/94 has not been issued under Section 5A of the Act and, therefore, this proviso also is not applicable. Accordingly, we hold that the benefit of Notification No. 47/94 is available to the appellants. The Appeal is accordingly, allowed.