Judgment:
1. Revenue has filed this appeal against Order-in-Appeal No.267/2003-Cus., dated 19-6-2003 passed by the Commissioner (Appeals), Bangalore.
2. The Respondents are 100% EOU. They cleared used packing materials viz., empty scrap bags without payment of duty to the domestic tariff area. Revenue proceeded against them. The Original Authority held that the Respondents have to pay appropriate duty for the disposal of the empty barrels as per the provisions of Notification No. 53/97-Cus., dated 3-6-1997. The Respondents appealed to Commissioner (Appeals) who held that the impugned goods are not excisable as empty barrels are not produced or manufactured in India in the present case. Since they are not excisable no duty can be levied. He also referred to Board's Circular No. 9/2000-Cus. Thus the Commissioner (Appeals) allowed the appeal of the Respondent and passed the impugned order.
3. Revenue is aggrieved over the decision of the Commissioner (Appeals) on the followings grounds.
(a) The OIA has been passed on a premise that OIO dated 28-3-2001 demanded excise duty on empty barrels cleared to DTA as if they are manufactured in the EOU. What is actually demanded in the OIO is not excise duty on empty barrels cleared to DTA but Customs Duty under Notification 53/97-Cus., dated 3-6-1997. The duty is demanded as per para 5B of Notification No. 53/97-Cus., dated 3-6-1997. In as much as the said empty barrels are well covered under the head "Containers suitable for repeated use".
(b) Board's Circular No. 9/2000-Cus., dated 17-2-2000 distinguishes two types of packing material mentioned in condition 5(b) and 5(c) of Notification No. 53/97-Cus. As per condition 5(b), the clearance is on payment of duty and as per condition 5(c), the clearance is without payment of duty. Only packing materials unsuitable for repeated use are allowed clearance without payment of Customs Duty.
4. Shri K.S. Reddy, Departmental Representative appeared for Revenue and Shri K.S. Ravi Shankar, learned Advocate appeared for the Respondent.
5. The learned Advocate strongly contended that the Commissioner (Appeals) has passed a correct order. In his view the goods are nothing but used packing materials and they would be covered under condition 5(c) of the said notification. In other words, as the goods are not excisable there is no liability for excise duty and as the goods are used packing materials, they would be covered by condition 5(c) of the said notification and hence there is no liability for customs duty also. This is the gist of the learned advocate's arguments.
7. We have gone through the records of the case carefully. The issue is quite simple. The Respondents, a 100% EOU imported certain goods free of duty. The goods were in barrels. After the using the goods, they cleared the empty barrels. The empty barrels are undoubtedly suitable for repeated use. In other words, they are different from packing material unsuitable for repeated use. Notification No. 53/97-Cus., dated 3-6-1997 deals with exemption to specified goods imported for production of goods for export or for use in 100% EOUs. Condition 5 of the notification deals with clearances of various types of goods in India. Condition 5(a) deals with clearance of capital goods, material handling equipment, office equipment, etc. While clearing these goods, Customs Duty should be paid on the depreciated value. Condition 5(b) deals with goods other than mentioned in Condition 5(a). These goods include container suitable for repeated use. These goods will be allowed clearance to Domestic Area only on payment of Customs Duty on the value at the time of import and at rates in force on the date of payment of such Customs Duty. Revenue's contention is that the empty barrels fall under 5(b). In our view such contention is acceptable.
Condition 5(c) deals with clearance of used packing materials such as card board boxes, poly bags of a kind unsuitable for repeated use.
These goods can be cleared without payment of any Customs Duty. Hence what is demanded in the OIO is Customs Duty on the barrels in accordance with Condition 5(b) of the Notification. It is not excise duty, hence the question of excisability of the impugned goods is not relevant. The Commissioner (Appeals) appears to have mixed up the issues. The Order-in-Original is legal and proper. In these circumstances, we allow the Revenue's appeal and uphold the Order-in-original. The impugned order is set aside.