Commissioner Of Central Excise, ... vs Ion Exchange (I) Ltd

(Arising out Order-in-Appeal No. PKS/148/BEL/2010 dated 17.06.2010 passed by the Commissioner of Central Excise (Appeals), Mumbai III)

For approval and signature: Honble Mr. S.S. Garg, Member (Judicial)

1. Whether Press Reporters may be allowed to see No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy Yes of the Order?

4. Whether Order is to be circulated to the Departmental Yes authorities?

Commissioner of Central Excise, Belapur Appellant

Vs.

Ion Exchange (I) Ltd. Respondent

Appearance:

Shri Raj Kumar Maji, AC (AR) for the appellant Ms. Anjali Hirawat, Advocate for the respondent

CORAM:

Honble Mr. S.S. Garg, Member (Judicial)

Date of hearing : 13.10.2015 Date of decision : 23.10.2015

O R D E R No:..

The present appeal is directed against the order dated 21.06.2010 passed by the Commissioner of Central Excise vide which the ld. Commissioner has allowed the appeal of the respondent company.

2. The brief facts of the case are that Ion Exchange (I) Ltd. which is a Export Oriented Unit had filed an appeal against the letter dated 14.09.2009 issued by the Superintendent, Central Excise, Range IV, Belapur IV Divn. directed the assessee company to pay 2% Education Cess and 1% Sec. Higher Education cess along with interest. In reply to this letter, the respondent vide their letter dated 01.10.2009 contested the demand raised by the department and took the defence that they were not liable to pay additional education cess against DTA clearance affected from 31.03.2008. However, to prove their bonafides they had deposited the amount of `1,06,028/- under protest. The letter dated 14.09.2009 was written by the Superintendent in pursuance to the observation in audit para no. CRA/EOU/SB/Nov/08-09/7 dated 14.12.2008. During the audit it was found that the unit was paying only excise duty equal to the duties of customs which could be leviable under the Customs Act, 1962 on like goods produced or manufactured outside India if imported into India but 2% of education cess and 1% Sec.Higher Education cess of the aggregate of all the duties of excise was not paid. Being aggrieved by the said letter, the respondent filed appeal before the ld. Commissioner on the following grounds:

a) The impugned order is liable to be set aside on the ground that the same had been passed in violation of the principles of natural justice since they were not given any opportunity for personal hearing .

b) As per the proviso to Section 3(1) of the Central Excise Act, 1944, the rates of Central Excise duty as mentioned in Section 3(1) are not applicable to the excisable goods which are produced or manufactured in a 100% EOU and brought to any place in7 India. The excisable goods manufactured in 100 % EOU and cleared in the DTA are leviable to duties of excise which shall be equal to aggregate of duties of Customs which would be livable under the Customs Act, 1962 or any other law for the time in force, on like goods produced or manufactured outside India if imported into India.

c) Education Cess @2% in terms of Finance Act. 2004 and Secondary and Higher Education Cess @l% in terms of Finance Act,2007 is payable on aggregate of duties of excise on all goods manufactured or produced in India.

d) The goods cleared from an EOU to DTA are treated at par with imported products and aggregate of Customs duty is required to be paid by on such goods by virtue of deemed provision contained in proviso to Section 3 of the Central Excise Act. The question of treating the same as excise duty and charging 3% education cess once again does not arise.

e) The appellants have already taken into account 3% education cess as part of CVD while calculating the aggregate of Custom duties. Therefore, the appellants are not liable to pay 3% education cess once again on the total duty amount

f) Chapter 22 of CBEC's Custom Manual under the Export Oriented Unit Scheme provides that the measure of excise duty leviable on goods manufactured in EOU /EPZs is worked out exactly in the same manner as applicable to imported goods. In the case of imported goods, 3% Education Cess (Excise) is included in the calculation of CVD. The appellants have also included 3% Education Cess on CVD. Therefore, payment of 3% education cess once again does not arise.

g) The Hon'ble High Court of Mumbai vide order dated 20.08.2008 reported in 2009(233)ELT 43 has set aside .the order of the Hon 'be Tribunal in the case of Sarla Polyester Limited Vs. Commissioner of Central Excise, VAPI (2008(226)ELT 238) whereby it was held by the Tribunal that an EOU is liable to pay 2% Education Cess in addition to excise duty payable at the time of clearance of goods through DTA.

3. The ld. Commissioner after considering the submission of both sides allowed the appeal of the assessee company. Now revenue has come in appeal before this Tribunal against the decision of the Commissioner.

4. Ld. counsel for the revenue submitted that the ld. Commissioner allowed the appeal of the assessee mainly relying on the decision of the Tribunal in the case of Sarla Performance Fibers Ltd. vs. CCE 2010 (253) ELT 203 wherein it was held by the Tribunal that once the measure of customs duty equivalent to Central Excise duty leviable on like goods has been worked out, the question of levying Education cess separately in respect of clearances by 100% EOU to DTA does not arise. He further submitted that the revenue has filed an appeal against the decision of the Tribunal in Sarla Performance Fibers Ltd. (supra) before the Hon'ble Apex Court and the matter is sub judice. In reply to this submission, ld. counsel for the appellant submitted that the Hon'ble Apex Court has finally dismissed the appeal of the Revenue against Sarla Performance Fibers Ltd. in the case of Commissioner vs. Meghmani Dyes & Intermediates Ltd. 2014 (307) ELT A79 (SC). The ld. counsel for the respondent company also submitted that after the decision of the Hon'ble Apex Court in Meghmani Dyes & Intermediates, the decision of Sarla Performance Fibers Ltd. (supra) has attained finality. He also submitted that in another case of Kemrock Inds. & Exports Ltd. 2015 (319) ELT 132 (Tri-Ahmd) the Tribunal by following Sarla Performance Fibers Ltd. has held that once the measure of customs duty equivalent to Central Excise leviable on the like goods has been worked out, the question of levying Education cess separately in respect of clearance by 100% EOU to DTA does not arise. Inasmuch as the issue is covered by the decision of the Tribunal and upheld by the Supreme Court cited above, I dismiss the appeal of the Revenue.

(Pronounced in Court on .)

(S.S. Garg) Member (Judicial)

//SR

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