JUDGMENT

S.H. KAPADIA, J. -

Civil Appeal No. 570 of 2002

1. The appellant, Mis VirIon Textile Mills Ltd. is a 100% export - oriented unit (EOU) engaged in the manufacture of texturised polyester yarn and dyed polyester yarn. The said yarn is sold against foreign exchange by the appellant in Domestic Tariff Area (DTA) subject to permission given by the competent authority under para 9.10(b) of the Export and Import Policy (Exim Policy), 1997 - 2002. In this civil appeal, the question for consideration is the rate of duty applicable to sales falling under para 9.10(b).

2. On 4 - 11 - 1999 a show - cause notice was issued by the Joint Commissioner of Central Excise, Mumbai to the appellant stating that the appellant was not paying appropriate duties on the goods cleared as per the a permission granted by the Development Commissioner. According to the show - cause notice, the appellant had paid countervailing duty (CVD) @ 30% on texturised polyester yarn plus Rs 9 per kg on dyed polyester yarn cleared under para 9.10(b) of the Exim Policy against foreign exchange. According to the show - cause notice, under the proviso to sub - section (1) of Section 3 of the Central Excise Act, 1944