JUDGMENT

D.K. Jain, J. —

1. Challenge in this batch of appeals filed by the revenue under Section 35(L)(b) of the Central Excise Act, 1944 (for short “the Act”) is to the orders passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zone (for short “the Tribunal”), inter alia, holding that the duty of Central Excise on shrimps and shrimp seeds produced and removed by the respondent (hereinafter referred to as “the assessee”), a 100% Export Oriented Unit (for short “EOU”), in the Domestic Tariff Area (for short “DTA”) without the approval of the Development Commissioner, would be payable under Section 3(1) of the Act and not under the proviso appended thereto.

2. Since the question of law arising for our consideration in all the appeals is the same, they are disposed of by this common judgment. In order to comprehend the controversy in these appeals, a brief reference to the facts in Civil Appeal Nos.4608-4609 of 2005, which was treated as the lead case, would suffice:

The assessee company is engaged in the production of shrimps and tiger prawns, falling under Chapter Sub Heading No.0301.00 of the Schedule to the Central Excise Tariff Act, 1985 (for short “the Tariff Act”). They imported some capital goods, viz. sand blowers and air filters, duty free under Customs Notification Nos. 188/93 dated 27th December 1993 and 196/94 dated 8th December 1994 for use in their integrated Aquaculture project. The imports were subject to the condition that the said goods would be used in the production of aquaculture products and 100% or such other percentage of the said products, as may be fixed by the Board of Approvals for 100% EOU, shall be exported out of India for a period of ten years or such extended period as may be specified by the said Board.

3. As per the Exim Policy (1st April 1992 to 31st March 1997), an EOU Aqua culture unit was permitted to sell upto 50% of its production in value terms in DTA, in accordance with the DTA sales guidelines notified in that behalf and subject to minimum value addition.

4. The guidelines for sale of goods in the DTA by an EOU were prescribed under Appendix XXXIII of the Hand Book of procedures for the aforementioned period. As per the said guidelines, sale of goods in the DTA was subject to payment of applicable duties as notified from time to time by the department of revenue; the units could opt for DTA sales on a quarterly, half yearly or annual basis with an intimation to the Development Commissioner of the EPZ concerned; application for DTA sales was to be accompanied by a statement disclosing information regarding ex-factory value of goods produced and of goods actually exported, and the Development Commissioner was to determine the extent of DTA sales admissible and issue goods removal authorisation in terms of value and quantity for sale in DTA.

5. It appears that during the period 1994-95 to 1997-98, the assessee produced and sold 11,15,29,540 number of shrimp seeds and 48,365 Kgs. Of shrimps in DTA without obtaining the permission of the Development Commissioner; without issuing proper invoices as mandated under Rule 100E of Central Excise Rules, 1944 (for short “the Rules”) and without payment of Excise Duty. Besides, the assessee also undertook certain job work whereby it processed 864.238 MT of shrimps and 905.580 MT of fish and cleared the said goods in DTA. According to the assessee, these goods were ultimately exported by the DTA units.

6. On 2nd September 1998, a notice was issued to the assessee to show cause as to why duty of excise equal to aggregate of the duties of customs, amounting to Rs. 7,80,58,074/-, should not be levied in terms of Section 3 of the Act read with Rule 9(2) read with proviso to sub-section (1) of Section 11A of the Act, and interest at 20% from first day of the month till the date of payment of duty should not be imposed under Section 11AB of the Act. An additional penalty of Rs. 7,80,58,074/- for non-payment of duty for the reason of