Full Judgment
2. Shri Jitender Singh, learned Advocate, submitted that the Appellant is a unit in Kandla Special Economic Zone; that they use plastic scrap and waste for manufacture of regenerated polymers; that they have been given permission by the Development Commissioner for sale of regenerated polymer in Domestic Tariff Area (DTA) and as such DTA sales are to be made on payment of Central Excise duty in accordance with the provisions of law; that under Notification No. 3/2001-C.E. duty dated 1-3-2001 plastic materials reprocessed in India out of the scrap or the waste of goods falling under specified Chapters have been exempted from payment of Central Excise duty; that accordingly, the goods produced in their unit being also plastic material reprocessed in India are not required to pay the countervailing duty on such goods. He, further, emphasised that countervailing duty or the Additional Customs duty is always equal to excise duty payable on similar goods manufactured in India, that if excise duty payable on similar goods manufactured in India is nil, the Additional Customs duty payable by a Special Economic Zone unit for the goods manufactured and cleared in DTA is only being equivalent to Excise duty payable on such goods manufactured in India.
3. Countering the arguments Shri Virag Gupta, learned Departmental Representative, submitted that as per Section 3 of the Customs Act, duty leviable on goods manufactured in Special Economic Zone and cleared in DTA is aggregate of duties determined under Section 12 of the Customs Act, which includes basic Customs duty, Additional Customs duty and Special Additional duty of Customs; that the Additional duty of Customs which is imposed under Section 3(1) of the Customs Tariff Act is equivalent to the Central Excise duty; that the Notification No.3/2001 was amended by Notification No. 48/2001-C.E., dated 10-10-2001 by inserting an Explanation which provides that "nothing contained in this exemption shall apply to plastic materials processed in a free trade zone, a special economic zone or a hundred per cent Export Oriented Undertaking, and brought to any other place in India". He, therefore, submitted that in view of the amendment made in Notification No. 3/2001, the benefit of the Notification is not applicable to a unit in a special economic zone. In reply, the learned Advocate relied upon the decision in the case of Ratnagiri Textiles Ltd. v. CCE, Jaipur II -2003 (50) RLT 121 (CEGAT) (sic) wherein it has been held that Additional duty of Customs shall be reckoned on effective rate and not on Tariff rate; that the Appellate Tribunal had also relied upon the decision of the Gujarat High Court in the case of Lucky Star International v. Union of India 4. We have considered the submissions of both the sides. The Appellants are claiming that as the plastic material reprocessed in India out of the scrap or waste of the goods falling within the specified Chapters of the Tariff, including Chapter 39, attracts nil rate of duty, the goods manufactured by them will satisfy the description given in the Notification and, therefore, should also not be charged to Additional Customs Duty which is equivalent to Customs duty when they clear the goods manufactured by them in Domestic Tariff Area. The submissions of the Appellants would have been acceptable but for the Explanation inserted in the Notification No. 3/2001 which provides that nothing contained in this exemption Notification shall apply to plastic material reprocessed in a special economic zone. Once the Notification restricts its application to the plastic material reprocessed in Special Economic Zone, the benefit of Notification cannot be extended to the Appellants, they being a unit in Kandla Special Economic Zone.
The ratio of the, decision in the case of Lucky Star International will not be applicable as the decision was passed much before the amendment in the Notification. The decision in the case of Ratnagiri Textile Ltd. is also not applicable as no Notification has been mentioned in the decision. Accordingly, we do not find any merit in the Appeal and is accordingly rejected.