Levy of Excise Duty from 100% EOU would be the Customs Duty payable if Goods manufactured outside India u/s 3(1)(b)(ii) of Central Excise Act: CESTAT [Read Order]

The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the Excise duty was to be levied and collected from a 100% Export Oriented Unit (EOU) would the duty of Customs payable as if the goods produced or manufactured outside India had been imported into India as per the Section 3(1)(b)(ii) of the Central Excise Act, 1944. 

A.R.Stanchem Private Limited, the appellant assessee was a 100% Export Oriented Unit (EOU) and was manufacturing Linear Alkyl Benzene Sulphuric Acid (LABSA) falling under Central Excise Tariff and Spent Sulphuric Acid emerging as a by-product out of the inputs i.e. Liner Alkyl Benzene Sulphuric Acid and Spent Sulphuric Acid. 

The assessee appealed against the order passed by the adjudicating authority to confirm the demand of differential duty along with interest and to impose penalties on the assessee. 

N.K.Chowdhury, the counsel for the assessee contended that the existence of an effective rate of duty under Notification No.2/2008-Central Excise, the Domestic Tariff Area (DTA) units would be paying the duty @ 14%, and at the same time, EOU units cannot be asked to make payment of duty while manufacturing the goods out of raw-materials received from the domestic market at a higher rate. 

K. Chowdhury, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee was not eligible for the exemption and the demand of differential duty raised by the revenue was as per the law and liable to be sustained. 

The Bench observed that the duty payable under the Notification in respect of the said goods shall not be less than the duty of excise leviable on the like goods produced or manufactured outside the EOU Unit, which was specified in the Schedule read with any other relevant Notification issued under Section 5A(1) of the Central Excise Act. 

The two-member bench comprising Ashok Jindal (Judicial) and Anpazhakan (Technical) held that the duty of excise shall be levied and collected on any excisable goods, that are produced and manufactured by a 100% EOU and brought to any other place in India, shall be an amount equal to the aggregate of duties of customs which would be leviable under the Customs Act, 1962. 

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