COMMISSIONER OF CENTRAL EXCISE, NAGPUR versus M/S UNIVERSAL FERRO & ALLIED CHEMICALS LTD. & ANR.CE F G H

Citation: [2020] 4 S.C.R. 116 · Decided: 06-03-2020 · Supreme Court of India · Bench: S.A. BOBDE, BHUSHAN RAMKRISHNA GAVAI, SURYA KANT · Disposal: Dismissed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2020] 4 S.C.R.
COMMISSIONER OF CENTRAL EXCISE, NAGPUR
v.
M/S UNIVERSAL FERRO & ALLIED CHEMICALS LTD.
& ANR.
(Civil Appeal Nos. 848-852 of 2009)
MARCH 06, 2020
[S.A. BOBDE, CJI, B. R. GAVAI AND SURYA KANT, JJ.]
Central Excise Act, 1944: s.3(1) and its proviso, s.5(1) and
its proviso – Job work – Export Oriented Unit (EOU) – Respondent
is 100% EOU and engaged in manufacture/processing and
clearance of Ferro Manganese and Silicon Manganese – Revenue’s
allegation against the respondent was that the respondent was
indulging in the job work activity of conversion of raw material
supplied by TISCO – As per agreement between Respondent and
TISCO, TISCO was to supply Manganese Ore and Coke/Coal free
of cost at its site and rest of the raw materials and consumables
required for conversion of Manganese Ore/Coke into Silicon
Manganese for TISCO was to be used by respondent from their
own purchases – Further, TISCO was to pay job charges to
respondent – Show cause notice issued to the respondent on the
ground that Circular No.67/98-Cus dated 14.9.1998, issued by the
CBEC had permitted the EOUs to undertake job-work on behalf of
a DTA unit only in textile, readymade garments, agro-processing
and granite sectors and by another Circular No.74/99 dated
5.11.1999, the said facility was extended in aquaculture, animal
husbandry, electronics hardware and software sectors and the sector
in which respondent-assessee had carried out the job-works was
not covered by either of the Circulars and, as such, the said job-
works were in violation of EXIM Policy – Show cause notice called
upon the respondent -assessee to show cause, as to why the said
Silicon Manganese should not be charged to full Central Excise
duty as per the proviso to s.3(1) of the Central Excise Act, 1944 by
denying the benefit of Notification No.8/97 dated 1.3.1997 – In
response to the show cause notices, it was submitted by respondent
that the removals in the DTA were in accordance with the permission
granted by the Development Commissioner and, as such, there was
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[2020] 4 S.C.R. 116
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no ground for denial of the concessional rate of duty laid down in
the said Exemption notification – Held: Under paragraph 9.17(b)
of the EXIM Policy 1997-2002, the EOU/EPZ units are entitled to
undertake job-work for export, on behalf of DTA units, with the
permission of Assistant Commissioner of Customs, provided the goods
are exported direct from the EOU/EPZ units and for such exports,
the DTA units will be entitled for refund of duty paid on the inputs
by way of Brand Rate of duty drawback – It is not in dispute that all
transactions between the respondent and TISCO were entered into
after obtaining necessary permission from the Development
Commissioner – The combined reading of paragraph 9.9(b) of the
EXIM Policy and the Circulars issued by the Board, particularly,
Circular dated 22.5.2000 showed that the respondent was entitled
to carry out the job-work on behalf of TISCO on payment of duty
as provided under Exemption Notification of 1997 – In view of
paragraph 10 of Circular no.49/2000- Cus dated 22.5.2000, the
facility of undertaking job-work by EOU/EPZ units which was
restricted to specific sectors was amended and the said facility was
extended to all sectors – It also provided that DTA units shall be
entitled to brand rate of duty draw back – Notification No.21/97-
C.E. dated 11.4.1997 specifically provides grant of exemption to
the EOUs from payment of duties, which are in excess of what is
leviable under sub-section (1) of s.3 on like goods, produced or
manufactured in India – Exemption Notification specifically
mentions, that the goods produced or manufactured by an 100%
EOU, which are allowed to be sold in India in accordance with
para 9.9(b) of the EXIM Policy, the proviso would be inapplicable
thereby, requiring the duties to be paid, as are required to be paid
under sub-Section (1) of s.3 of the said Act – Undisputedly, in the
instant case, the goods were produced and manufactured by the
respondent, an 100% EOU; they were manufactured wholly from
the raw materials produced or manufactured in India and, allowed
to be sold in India in accordance with the provisions of paragraph
9.9(b) of the EXIM Policy – Thus the conditions of Notification
No.21/97-C.E. were satisfied – Therefore, respondent was entitled
to carry out the job work for TISCO and entitled to exemption from
payment of duty – Revenue’s appeal was rig

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