ORDER
V.K. Agrawal, Member (T)
1. M/s. R.K. Ispat Ltd. had filed the present appeal against Order-in-Original No. 3/2004, dated 26-2-2004 by which the Commissioner has confirmed the demand of duty and imposed equivalent amount of penalty on the clearances effected by them into Domestic Tariff Area (D.T.A.).
2. We heard Shri B.L. Narasimhan, learned Advocate for the Appellants and Smt. Krishna A. Mishra, learned SDR for the Revenue. The learned Advocate submitted that the Appellants Textile division was functioning as a Domestic Tariff Area unit (DTA unit); that on 29-5-2001 they applied for conversion of the DTA unit into 100% Export Oriented Undertaking; that the letter of permission was issued by the Development Commissioner on 25-6-2001; that they were granted warehousing licence under Section 58 of the Customs Act on 27-7-2001; that they executed B-17 Bond which was accepted by the authorities on 13-8-2001; that the Appellants w.e.f. 1-9-2001 started functioning as an 100% E.O.U. and availed of the benefit as applicable to 100% E.O.U.; that for the period prior to 1-9-2001 they did not avail any of the benefits available to the E.O.U. namely duty free procurement of raw material, etc.; that during the period from 27-7-2001 to 31-8-2001 they had cleared the manufactured products on payment of normal applicable central excise duty; that the Commissioner, under the impugned Order, has confirmed the demand of duty and imposed penalty on the ground that the clearances of final products effected by them during the said period should be treated as clearances by an 100% E.O.U. in D.T.A., and therefore, should be chargeable to Central Excise duty under proviso to Section 3(1) of the Central Excise Act, namely 100% of the duties of Customs leviable on imported goods. The learned Advocate, further, submitted that even if the Appellants is treated as an E.O.U. w.e.f. 27-7-2001 they are eligible for the benefit of exemption provided under Notification No. 8/97-C.E. dated 1-3-97; that this notification partially exempts the finished products, rejects, waste, or scrap produced or manufactured in a 100% E.O.U. wholly from the raw materials produced or manufactured in India and allowed to be sold in India under and in accordance with the proviso of sub-paragraphs A, B, C, D, & F of Paragraph 9.9 or of Paragraph 9.20 of the Export & Import Policy, 1997-2002; that the Commissioner has not extended the benefit of notification No. 8/97 on the ground that the goods cleared in D.T.A. by them cannot be construed as the goods allowed to be sold in India because they had not obtained any permission from the Development Commissioner. He, further, mentioned that the Appellants sought alternatively the benefit of Notification No. 125/84-C.E., dated 26-5-84 which exempts all excisable goods, produced or manufactured in a 100% E.O.U.; that notification further provides that the exemption shall not apply to the goods, if allowed to be sold in India; that the Commissioner has also disallowed the benefit of Notification No. 125/84 on the ground that the goods are to be considered as allowed to be sold in India because otherwise it will lead to absurd consequences; that for this purpose the Commissioner has relied upon the decision of the Larger Bench of the Tribunal in the case of Himalya International – 2003 (154) E.L.T. 580 (T – LB) wherein the Larger Bench has held that an 100% E.O.U. is liable to pay Central Excise duty under proviso to Section 3 of the Central Excise Act even if the goods are not allowed to be sold in India by 100% E.O.U.
3. The learned Advocate contended that the benefit of Notification No. 8/97 has been disallowed to them on the ground that the Appellants have not been allowed to sell the goods in India and the benefit of Notification No. 125/84 has been denied to them by holding that the goods should be treated as allowed to be sold in India; that both the findings cannot co-exist; that if the goods are treated as allowed to be sold in India the benefit of Notification No. 8/97 has to be extended to them. If on the other hand Revenue gives the finding that the goods have not been allowed to be sold in India, the benefit of notification No. 125/84 has to be extended to them. Finally he contended that the expression ‘allowed to be sold in India’ has to be construed and considered on equal footings in both the notifications.
4. The Appellants have not pressed before us the contention that they started working as 100% E.O.U. only from 1-9-2001. The only contention of the learned Advocate is that the benefit of both the notifications No. 8/97 and 125/84 cannot be denied to them simultaneously as the condition imposed in both the notifications is same that the goods have been allowed to be sold in India. Notification No. 8/97 provides partial exemption subject to the condition that the finished products have been manufactured wholly from the indigenous raw material and the unit has been allowed to sell the goods in India. It has not been disputed before us by the Revenue that the finished goods manufactured by the Appellants have not been manufactured wholly from the indigenous raw material. The only condition to be fulfilled by the Appellants is that the goods have been allowed to be sold in India. The Commissioner has held that the benefit of Notification No. 8/97 is not available as they have not been allowed to sell the goods in India. We also observe that Notification No. 125/84 also exempts all excisable goods manufactured in a 100% E.O.U. provided the goods are not allowed to be sold in India. While denying the benefit of this notification the Commissioner has held that the goods are to be treated as allowed to be sold in India. We agree with the learned Advocate that the phrase ‘allowed to be sold in India’ cannot be interpreted differently for different notifications and it has to be construed and considered on the equal footings for both the notifications. As the Commissioner in the impugned Order, relying upon the decision of the Larger Bench of the Tribunal in the case of Himalya International v. CCE (supra), has treated the goods as allowed to be sold in India we hold that the benefit of Notification No. 8/97 is available to them. Once the benefit of Notification No. 8/97 is extended to them the question of imposing any penalty on the Appellants does not arise which accordingly we set aside. The amount of duty, if any payable by the Appellants under Notification No. 8/97-C.E., has to be worked out by the Adjudicating Authority. The appeal is disposed in the above terms.