1. A 100% Export Oriented Unit (EOU) disputed the denial of an excise duty exemption notification for Domestic Tariff Area (DTA) clearances of goods manufactured from indigenous raw materials. (Para 1 , 2 , 3 , 5 )
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2026 Supreme(Online)(CESTAT) 3867
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL EASTERN ZONAL BENCH: KOLKATA
Ashok Jindal, J, K. Anpazhakan, Technical Member
Goodricke Group Limited – Appellant
Versus
Commissioner of Customs, Central Excise and Service Tax, Siliguri Commissionerate – Respondent
Excise Appeal No. 76379 of 2016 | Excise Cross Objection No. 75590 of 2025
Important Points
A procedural error in claiming the wrong serial number of an exemption notification does not bar an assessee from the correct benefit if conditions are met. Furthermore, prior departmental knowledge of facts precludes the invocation of the extended period of limitation for suppression.
Subject
Tax - Central Excise
Act Referred
Central Excise Act, 1944: S.11A, S.11AC(1)(c)
Customs Tariff Act, 1975: S.3(5)
Central Excise Tariff Act, 1985
Customs Tariff Act, 1975: S.3(5)
Central Excise Tariff Act, 1985
Headnote
(A) Exemption Notifications - Application of Serial Numbers - A procedural lapse in claiming benefit under an incorrect serial number of a notification does not preclude an assessee from claiming benefit under another applicable serial number of the same notification if the substantive conditions are fulfilled. (Para 17, 17.1)
(B) 100% Export Oriented Unit (EOU) - DTA Clearances - Goods manufactured wholly from indigenous raw materials, cleared in accordance with the Export and Import Policy, and where like goods manufactured by non-EOUs are not exempt from excise duty, are eligible for concessional treatment under Sl. No. 3 of Notification No. 23/2003-C.E. (Para 14.1, 14.2, 14.3)
(C) Limitation - Extended Period - Where the Department has prior knowledge of the material facts through previous proceedings or audits, the extended period of limitation cannot be invoked based on allegations of suppression. (Para 18.1, 18.2)
(D) Penalty - Section 11AC - The mere adoption of an incorrect serial number of an exemption notification, in the absence of evidence of fraud or willful misstatement, does not constitute suppression with intent to evade duty. (Para 19)
Issues: Whether the appellant was entitled to the benefit of Sl. No. 3 of Notification No. 23/2003-C.E. and whether the invocation of the extended period of limitation and penalty was sustainable.
(B) 100% Export Oriented Unit (EOU) - DTA Clearances - Goods manufactured wholly from indigenous raw materials, cleared in accordance with the Export and Import Policy, and where like goods manufactured by non-EOUs are not exempt from excise duty, are eligible for concessional treatment under Sl. No. 3 of Notification No. 23/2003-C.E. (Para 14.1, 14.2, 14.3)
(C) Limitation - Extended Period - Where the Department has prior knowledge of the material facts through previous proceedings or audits, the extended period of limitation cannot be invoked based on allegations of suppression. (Para 18.1, 18.2)
(D) Penalty - Section 11AC - The mere adoption of an incorrect serial number of an exemption notification, in the absence of evidence of fraud or willful misstatement, does not constitute suppression with intent to evade duty. (Para 19)
Issues: Whether the appellant was entitled to the benefit of Sl. No. 3 of Notification No. 23/2003-C.E. and whether the invocation of the extended period of limitation and penalty was sustainable.
Legal Category Hierarchy
Advocates:
For the Appellants/Petitioners: Arnab Chakraborty
For the Respondents: Souvik Dutta
For the Appellants/Petitioners: Arnab Chakraborty
For the Respondents: Souvik Dutta
Table of Contents
2. The appellant argued it was eligible for exemption under Notification No. 23/2003-C.E., while Revenue contended that the specific serial entry criteria were not fulfilled, justifying higher duty demands. (Para 7 , 10 , 11 )
3. The court found that the appellant satisfied the substantive conditions of the exemption notification and that the Revenue failed to prove wilful suppression to invoke extended limitation periods. (Para 13 , 14 , 15 , 18 , 19 )
4. An assessee is not estopped from claiming the correct exemption head if substantive conditions are met, and mere procedural lapses regarding notification entries do not deny rightful tax benefits. (Para 16 , 17 )
5. The court set aside the confirmed excise duty demand, interest, and penalties, directing re-computation of duty under the correct exemption entry within the normal period of limitation. (Para 20 , 21 )
6. Can an assessee claim an exemption at a later stage if initially claimed under the wrong category?
Yes. An applicant is not debarred or estopped from claiming a correct exemption benefit if the substantive conditions of the notification are satisfied, regardless of an initial incorrect claim. (Para 10 , 17 )
7. Does the mere adoption of an incorrect serial number in a tax notification constitute wilful suppression for penalty purposes?
No. A bona fide misinterpretation or procedural lapse in applying the correct serial number of an exemption notification does not amount to wilful suppression or intent to evade duty. (Para 18 , 19 )
8. Can the Revenue invoke an extended period of limitation based on facts known during prior proceedings?
No. The extended period of limitation cannot be invoked to reopen alleged suppressions when the material facts were already within the Department's knowledge from previous verified proceedings. (Para 18 )
ORDER: [PER SHRI K. ANPAZHAKAN]
The present appeal has been filed assailing Order-in-Original No. 03/COMM/CE/SLG/16-17 dated 11.05.2016, passed by the Commissioner of Customs, Central Excise and Service Tax, Siliguri Commissionerate, C.R. Building, Haren Mukherjee Road, Hakimpara, Siliguri – 734 001, whereby a total demand of Central Excise duty amounting to Rs.1,13,79,425/- was confirmed against M/s. Goodricke Group Limited [hereinafter referred to as the “appellant”], in respect of its Domestic Tariff Area (DTA) clearances of ‘Instant Tea’ manufactured by its 100% Export Oriented Unit (EOU), together with applicable interest and an equivalent penalty of Rs.1,13,79,425/- under Section 11AC(1)(c) of the Central Excise Act, 1944. The crux of the dispute concerns the appellant’s entitlement to the benefit of Notification No. 23/2003-C.E., dated 31.03.2003, as amended, and the manner in which the duty payable on the aforesaid DTA clearances was required to be computed.
2. The facts of the case are that the appellant operates the Aibheel Instant Tea Plant at Aibheel Tea Garden, Matelli, District Jalpaiguri, West Bengal, which, during the material period, functioned as a 100% Export Oriented Unit and was engaged in the manufacture of ‘Instant Tea’, classifiable under CETH 2101 2010 of the First Schedule to the Central Excise Tariff Act, 1985. The appellant held Central Excise Registration No. AABCG1614QXM021. Its manufacturing operations involved the use of different categories of raw materials for distinct products and clearances. Chinese Oolong Tea imported by the appellant was converted into Instant Oolong Tea and exported in its entirety. On the other hand, indigenous tea, green tea leaves and tea waste procured locally were utilised for the manufacture of soluble Instant Tea, a part of which was exported and the remainder cleared into the DTA in accordance with the applicable Foreign Trade Policy.
3. A material feature of the appellant’s manufacturing arrangement was that although the appellant manufactures Instant Tea using imported as well as indigenous tea, the Instant Tea cleared into the DTA was manufactured exclusively from indigenous raw materials, without utilisation of any part of the imported Chinese Oolong Tea in the manufacture thereof. The appellant maintained separate accounts in respect of the indigenous raw materials so utilised. The distinction between the imported raw materials employed for the exported Instant Oolong Tea and the indigenous raw materials used for the soluble Instant Tea cleared into the DTA thus formed an integral part of the factual basis upon which the appellant claimed the applicable concessional treatment.
4. Before 1st April 2003, DTA clearances by a 100% EOU using wholly indigenous raw materials were governed by Notification No. 8/1997-C.E. dated 01.03.1997, as amended. While this old notification aimed to align an EOU’s tax rate with standard domestic factories, the benefit was completely denied if the domestic product was fully exempt or carried a "Nil" rate of duty. In those cases, the EOU was forced to pay heavy aggregate customs duties.
4.1. This restriction was removed on 1st April 2003 with the introduction of Notification No. 23/2003-C.E. dated 31.03.2003 (Serial No. 3). This entry established a clear exemption mechanism, ensuring that an EOU’s duty liability is strictly capped at a rate no higher than the central excise duty payable by a standard domestic (DTA) manufacturer for identical goods.
5. The appellant continued its manufacturing operations and DTA clearances in the aforesaid manner. Its records and duty-payment practices were also subjected to departmental scrutiny and audit from time to time, including an EA-2000 audit conducted in November 2008 and a further EA-2000 audit undertaken in 2012, covering the preceding five years. In the course of the investigation giving rise to the present proceedings, the Department also scrutinised the appellant’s E
