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2020 ] COMMR. OF C. EX., NAGPUR v. UNIVERSAL FERRO & ALLIED CHEMICALS LTD. 23
hardware and software sectors vide Circular dated 5-11-1999, was extended to
EOU/EPZ units in all sectors. It has further been provided, that DTA units shall
be entitled to avail of the brand rate of duty drawback for such job work under-
taken by EOUs/EPZ units concerned. It also provides, that earlier circulars is-
sued by the Board stood modified to the said extent.
34. We find, that failure on the part of the Commissioner, who passed
the order-in-original, to notice the Circular dated 22-5-2000 has resulted in pass-
ing an erroneous order. It also appears, that after the show cause notice was is-
sued to UFAC, the Commissioner had sought a clarification from the Sponsoring
Authority i.e. the Development Commissioner, SEEPZ vide communication dat-
ed 6-11-2001. It will be relevant to refer to the communication dated 28-11-2001
addressed by Joint Development Commissioner to the Additional Commissioner
(CIU), Office of the Commissioner of Customs and Central Excise, Nagpur, rele-
vant part of which reads thus :
“Sub. : Manufacture of goods of DTA Unit by an EOU on conversion basis - Pro-
visions of Para 9.17(b) of the EXIM Policy 1997-2002 - Correspondence regarding.
M/s. Universal Ferro Ltd., Tumsar
*********
Kindly refer to letter C. No. II(39)/25/CIU/2001, dated 6th Novem-
ber, 2001, addressed to Development Commissioner, SEEPZ SEZ. Ministry
of Commerce has clarified that the EXIM Policy permits the kind of opera-
tion being undertaken by the unit and it should be permitted.”
35. UFAC had also sought a clarification to this effect from the Spon-
soring Authority. It will be relevant to refer to the communication dated 23-10-
2001, addressed by the Joint Development Commissioner, SEEPZ, relevant part
of which reads as under :
“Kindly refer to your query regarding DTA sale. The position clarified to
Central Excise, Nagpur, is as follows :-
‘The general question raised was whether while selling in DTA under
DTA sale permission issued in terms of Para 9.9(b) of the EXIM Policy, a
unit can take supply of raw material from a Company in the DTA and give
back the finished product (its approved as per LOP and also covered by the
DTA sale permission).
The unit is free to procure raw material in terms of Para 9.2 of Policy. The
raw material is meant for production either export or clearance under valid DTA
permission. The unit may convert the RM into its approved product and clear the
same against valid DTA sale permission (under para 9.9(b) after paying applicable
duty on assessable value of finished product, i.e. value of RM + conversion charges.
There is no bar on this activity under the EXIM Policy.’ ”
(emphasis supplied)
36. It is not in dispute that all transactions between UFAC and TISCO
have been entered into after the necessary permission was obtained from the De-
velopment Commissioner. As a matter of fact, the order-in-original itself men-
tions thus :
“The M/s. UFAC was a 100% EOU engaged in the manufacture of Ferro
Manganese & Silico Manganese and clearances thereof for export as well as
in DTA on payment of Central Excise duty. The unit was also doing job
work for M/s. TISCO in respect of Silico Manganese on the basis of Memo-
randum of Agreement dated 28-12-99 entered into with M/s. TISCO. These
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