ORDER
Moheb Ali M., Member (T)
1. The appellants are engaged in the manufacture of Polyester Grey Fabrics and as an 100% EOU. Pursuant to the permission granted by Development Commissioner the appellants removed the said product on payment of Central Excise duty (8%) against payment in foreign exchange under para 9.10 (b) of the Import Export Policy. All these removals were under invoices under Rule 100D of the Central Excise Rules. The Department’s contention is that such removals should be made on payment of duty under proviso to Section 3(1) of Central Excise Act which provides for payment of duty calculated on the aggregate of customs duties payable on the goods and not under the main Section 3(1). The differential duty was determined to be Rs. 35,74,201 and a penalty was imposed. Hence; the appeal.
2. Heard both sides.
3. The main contention of the Ld. Advocate is that under Clause 7 of Notification 53/97Cus. aggregate of Customs duty is payable only when the goods removed into DTA are not excisable and since the goods (polyester grey fabrics) are excisable, it is Central Excise duty applicable to the said goods that is payable. We are unable to accept this contention. What all Clause 7 of Notification No. 53/97 says is that when the goods allowed to be sold in India are not excisable customs duty equal to the Customs duty leviable on such articles as if imported as such, is payable. An example of this type is 100% EOU engaged in the processing of say, shrimps. When a certain percentage of FOB Value of Shrimps exported is allowed to be sold in India by the Development Commissioner, the EOU is required to pay customs duty equivalent to the duty payable on the imported articles that have gone into the processing of such shrimps because shrimps themselves are not excisable.
4. In the present case the goods allowed to be sold are excisable and under proviso to Section 3(1) of the Central Excise Act, central excise equivalent to the aggregate of the customs duty payable on such articles is payable. The appellant however removed excisable goods on payment of central excise duty as if they are removed from a domestic unit. The differentiated duty between the duty already paid on the one leviable under proviso to Section 3(1) of Central Excise Act, is therefore payable. We also hold that the benefit of Notification 2/95 has to be accorded while calculating the differential duty in case
5. It is not clear whether the Revenue has given allowance to the fact that the price at which goods are sold in India is a cum-duty price while calculating the differential duty. This needs to be looked into.
6. The appeal is partly allowed in the following terms.
(a) The correct rate of duty payable is the aggregate of customs duty payable on the excisable goods allowed to be sold in India read with Notification No. 2/95.
(b) Differential duty be calculated in terms of our observations contained in para 5 above.
6. The appeal thus is partly allowed.
(Operative part pronounced in Court)