- (1.) These appeals arise out of a judgment dated 19th December, 2006 passed by CESTAT, West Zonal Bench, Ahmedabad, dealing with nine appeals against three orders -in -original passed by the Commissioner of Central Excise, and judgments of CESTAT which apply and follow the aforesaid judgment. By the judgment dated 5 -12 -2006 [2007 (210) E.L.T. 108 (Tribunal)], excise duty amounting to Rs. 4,26,93,826/ -, Rs. 7,22,75,718/ - and Rs. 7,10,10,030/ - along with penalty of Rs. 4,26,93,826/ -, Rs. 5 crore and Rs. 5 crore have been imposed on M/s. Sudhir Gensets Ltd. for varying periods, and a penalty of Rs. 10 lakhs has been imposed on Shri Yusuf Khan, Works Manager of Sudhir Gensets Ltd. by the Commissioner's order. Duty amounting to Rs. 66,17,29,496/ - and penalty of equal amount has been imposed on M/s. Sahajanand Tech. Pvt. Ltd. along with a penalty of Rs. 2 crore on Shri J. Vaghasia, Vice -President of M/s. Sahajanand Tech. Pvt. Ltd. by the Commissioner's order in the aforesaid case, and duty amounting to Rs. 1,44,75,596/ - along with penalty of equal amount has been demanded from M/s. Jakson and a penalty of Rs. 10 lakhs and Rs. 5 lakhs has been imposed on Shri Sameer Gupta, Managing Director and Shri P. Rameshan, Vice -President respectively by the Commissioner's order in the aforesaid case. The brief facts of these cases are that all the three Assessees are 100% EOUs who were supplying goods to EPCG licence holders and accordingly, in terms of Sec. 3 of the Central Excise Act, 1944, such sales were to be considered as DTA sales for which Central Excise duty was required to be paid, which according to Sec. 3 of Central Excise Act, 1944 was an amount equal to the aggregate of duty of customs which would be leviable Under Sec. 12 of the Customs Act, 1962 on like goods produced or manufactured outside India, if imported into India, and where the said duties of customs are chargeable by reference to their value, the value of such excisable goods shall, notwithstanding anything contained in any other provision of the Central Excise Act be determined in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975. The EPCG licence holders were entitled to concessional rate of basic customs duty @ 5% ad valorem or 10% ad valorem as the case may be and were exempted from additional duty and special additional duty in terms of Notification No. , dated 1 -4 -1997, Notification No. , dated 27 -4 -2000 and Notification Nos. 44/2002, 55/2003 -Cus. in force during the relevant period. The Appellants have supplied the goods to these EPCG licence holders on payment of concessional Customs duty at the applicable rate by availing the benefit of the said notifications, and cleared the same to the EPCG units. The Appellants were, however, issued show cause notices stating that what was payable by them was Central Excise duty, and accordingly the exemption notifications relating to Customs duty shall not be applicable to them unless there is an exemption notification issued under the Central Excise Act. Another ground of the show cause notices was that Notification No. 55/2003 specifies the ports from which the imports could take place and since in the present case the goods were not imported through these specified ports, concessional rate of duty prescribed under Notification No. 55/2003 was not applicable to them. The show cause notices were adjudicated and duties were demanded and penalties imposed by the Commissioner in three orders as has been stated above.
(2.) Shri Yashank Adhyaru, learned Senior Advocate, appearing on behalf of the revenue, reiterated the submissions made before the Tribunal. His basic submission was that as what was, in fact, paid by these 100 per cent export oriented units was excise duty and not customs duty, the benefit of customs duty exemption notifications will not avail them. The second ground of the show cause notices was not pressed before us as Board circulars have clarified that the condition of import through specific ports is inapplicable to 100% EOUs. On the other hand, Shri V. Lakshmikumaran, learned Advocate, appearing on behalf of the Respondents, stated that Shri Adhyaru's argument would not be correct for the simple reason that Sec. 3 of the Central Excise Act creates a legal fiction by which all sales made by these EOU's in the domestic tariff area to EPCG licence holders were to be governed by the Customs Act and Customs Tariff Act, and hence exemption notifications under these Acts alone were to be seen.
(3.) Sec. 3 of the Central Excise Act, as it stood at the relevant time, states: "Section 3. Duties specified in First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 to be levied. - (1) There shall be levied and collected in such manner as may be prescribed, - (a) a duty of excise to be called the Central Value Added Tax (Cenvat) on all excisable goods (excluding goods produced or manufactured in special economic zones) which are produced or manufactured in India as, and at the rates, set forth in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); (b) a special duty of excise, in addition to the duty of excise specified in Clause (a) above, on excisable goods excluding goods produced or manufactured in special economic zones specified in the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) which are produced or manufactured in India, as, and at the rates, set forth in the said Second Schedule. 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 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 the Customs Act, 1962 (52 of 1962) or any other law for the time being in force, on like goods produced or manufactured outside India if imported into India, and where the said duties of customs are chargeable by reference to their value; the value of such excisable goods shall, notwithstanding anything contained in any other provision of this Act, be determined in accordance with the provisions of the Customs Act, 1962 (52 of 1962) and the Customs Tariff Act, 1975 (51 of 1975). Explanation 1. - Where in respect of any such like goods, any duty of customs leviable for the time being in force is leviable at different rates, then, such duty shall, for the purposes of this proviso, be deemed to be leviable at the highest of those rates. Explanation 2. - In this proviso, - (i) "free trade zone" means a zone which the Central Government may, by notification in the Official Gazette, specify in this behalf; (ii) "hundred per cent export -oriented undertaking" means an undertaking which has been approved as a hundred per cent export -oriented undertaking by the Board appointed in this behalf by the Central Government in exercise of the powers conferred by Sec. 14 of the Industries (Development and Regulation) Act, 1951 (65 of 1951), and the rules made under that Act; (iii) "Special Economic Zone" means a zone which the Central Government may, by Notification in the Official Gazette, specify in this behalf.";