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PETITIONER: M/S.  SIV INDUSTRIES LTD.

       Vs.

RESPONDENT: COMMISSIONER OF CENTRAL EXCISE & CUSTOMS

DATE OF JUDGMENT:       10/03/2000

BENCH: D.P.Wadhwa, Ruma Pal

JUDGMENT:

     D.P.  WADHWA, J.

     This  appeal  is  directed  against  the  order  dated November  5, 1997 of the Customs, Excise and Gold  (Control) Appellate  Tribunal (for short the ’Tribunal’) allowing  the appeal  of the respondent and directing that duty of Central Excise  was payable under Section 3(1) of the Central Excise and  Salt  Act,  1944 (for short the ’Act’)  and  not  under proviso  to  Section  3(1)  of the Act  as  claimed  by  the appellant.   Section  3(1)  of  the  Act  with  proviso,  in relevant part, is as under:  - "Section 3.  Duties specified in the Schedule to the Central Excise Tariff Act, 1985 to be levied    (1) There shall be levied and collected  in  such manner  as  may  be  prescribed  duties  of  excise  on  all excisable  goods  other  than  salt which  are  produced  or manufactured in India and a duty on salt manufactured in, or imported  by  land  into, any part of India as, and  at  the rates,  set  forth  in the Schedule to  the  Central  Excise Tariff Act, 1985:

     Provided  that  the  duties of excise which  shall  be levied  and  collected  on  any excisable  goods  which  are produced or manufactured, -

     (i)  in  a  free trade zone and brought to  any  other place in India;  or

     (ii) by a hundred per cent export oriented undertaking and allowed to be sold in India,

     shall  be  an  amount equal to the  aggregate  of  the duties  of customs which would be leviable under section  12 of  the  Customs  Act,  1962 (52 of  1962),  on  like  goods produced  or  manufactured  outside India if  imported  into India,  and where the said duties of customs are  chargeable by  reference  to their value;  the value of such  excisable goods shall, notwithstanding anything contained in any other provision  of this Act, be determined in accordance with the provisions of Customs Act, 1962 (52 of 1962) and the Customs Tariff Act, 1975 (51 of 1975).

     Explanation  1.    Where in respect of any such  like goods,  any duty of customs leviable under the said  section 12  is  leviable at different rates, then, such duty  shall,

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for  the purposes of this proviso, be deemed to be  leviable under the said section 12 at the highest of those rates.

     Explanation 2  In this proviso, -

     (i) "free trade zone" means the Kandla Free Trade Zone and  the  Santa Cruz Electronics Export Processing Zone  and includes  any  other  free  trade  zone  which  the  Central Government  may,  by notification in this Official  Gazette, specify in this behalf;

     (ii)  "hundred  per cent export-oriented  undertaking" means  an  undertaking which has been approved as a  hundred per cent export- oriented undertaking by the Board appointed in  this behalf by the Central Government in exercise of the powers   conferred   by  section  14   of   the   Industries (Development and Regulation) Act, 1951 (65 of 1951), and the rules made under that Act."

     Under  the  relevant  import policy  the  100%  Export Oriented  Unit  Scheme  (EOU) envisages an  industrial  unit offering for export its entire production, excluding rejects or  items otherwise specifically permitted to be supplied to the  Domestic Tariff Area.  Industrial units approved by the Board  of Approvals (BOA) set up for this purpose alone  are eligible  for  import  of   capital  goods,  raw  materials, components  and  spares, etc.  required by them  for  export production  under the Scheme.  Based on the approval granted by  the Board of Approvals a 100% EOU is eligible to import, without  payment  of  customs duty,  capital  goods,  office equipment,  proto-types  and technical  samples,  generating sets,  raw materials, components consumables, intermediates, packing  materials,  material handling equipment  like  fork lifts, overhead cranes and spares under Open General Licence subject to certain conditions.  Applications for approval as 100%  Export  Oriented  Unit  are to  be  submitted  to  the Secretariat  for Industrial Approvals, Ministry of Industry. Such EOU under no circumstances can be allowed to dispose of the   export   product  in   the  domestic   market   unless specifically  allowed  by  the  Government.   Appellant  was granted  permission  to set up a 100% Export  Oriented  Unit (EOU)  for  the manufacture of viscose staple fibre  at  its factory  at Sirumugal in Coimbatore District in the State of Tamil  Nadu.   The Letter of Intent dated December 19,  1991 was  issued  to  the  appellant   for  the  purpose  by  the Secretariat  for  Industrial  Approvals (SIA),  Ministry  of Industry,  Government  of  India.   On  September  8,   1993 appellant  made an application to the Secretary, Ministry of Commerce,  Government  of India and sought debonding of  its unit  from 100% EOU, i.e., withdrawal from 100% EOU  Scheme. By letter dated October 18, 1993 of the Ministry of Commerce it  was  agreed  in  principle to  allow  the  appellant  to withdraw  from the 100% EOU Scheme subject to the conditions on  which  withdrawal  was  permitted and  as  mentioned  in annexure  to the letter.  Once the debonding of the unit  is permitted,  finished goods earlier manufactured in the  100% EOU  could be cleared for Domestic Tariff Area (DTA) on levy of duty of Central Excise.  The dispute is at what rate this duty  is to be levied.  As noted above, it is the contention of the appellant that excise duty is payable on the finished goods  under  main  Section 3(1) of the  Act  together  with customs  duty  on  the  imported raw material  used  in  the manufacture  of said finished goods lying in the stock.  The Revenue  on  the other hand contends that excise duty  under proviso  to  Section  3(1)  of the Act  is  payable  on  the

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finished  goods and with no customs duty being levied on the raw  materials gone into the manufacture of finished  goods. It is the expression "allowed to be sold in India" appearing in  proviso to Section 3(1) of the Act which in fact is  the bone  of contention between the parties.  Appellant contends that  for  the  application of proviso to Section  3(1)  two conditions  have  to  be   cumulatively  and  simultaneously satisfied,  viz.,  (1)  goods should have been  produced  or manufactured  by  an existing 100% EOU and (2)  these  goods should  have  been allowed to be sold in India.  It  is  not necessary  for  us to state the grounds on  which  appellant sought   debonding  of  its  100%   EOU.   By   letter   No. 12/335/91-EP  dated  October,  1993 from the  Government  of India  in the Ministry of Commerce, appellant was told  that its  request for debonding of the unit was considered by the Board  of  Approvals (BOA) for 100% EOUs in its meeting  and had   been  recommended  for   approval  subject  to  normal conditions  of debonding.  It was stated that formal  letter would  be issued by SIA in due course.  It was also  pointed out that the letter was being issued to enable the appellant to  work out various modalities with the Customs Authorities and  start  for switching over from 100% EOU to DTA  and  to enable   it  to  obtain   release/dispose  of  the   stocks/ inventories  on payment of applicable duties.  By letter No. E.O.335(91)-IL/MRTP   dated  November  3,   1993  from   the Government  of India in the Ministry of Industry, Department of   Industrial  Development,   Secretariat  for  Industrial Approvals  (SIA) to the appellant it was agreed in principle to  allow  the  appellant to withdraw from 100%  EOU  Scheme subject  to  conditions  mentioned in the  annexure  to  the letter.   It  will be appropriate to set out this letter  as well  as  the  annexure thereto, containing  the  conditions governing withdrawal from 100% EOU Scheme:  -

     "No.E.O.335(91)-IL/MRTP  Government of India  Ministry of Industry Department of Industrial Development Secretariat for Industrial Approvals EOU SECTION

     New Delhi, the 3rd November, 1993

     M/s.   South  India Viscose Limited.,  P.B.   No.1844, 1977-A, Trichy Road, Singanallur, Coimbatore  641 005.

     Subject:-  Letter  of  permission  No.   PER:163  (91) /E.O.335(91)-IL(MRTP),  dated  18.12.1991   issued  for  the manufacture  of  viscose  staple  fibre  under  100%  Export Oriented    Scheme         Debonding     of    the    unit. (E.O.335/91-IL/(MRTP)-

     Gentlemen,

     I  am  directed to refer to your letter  addressed  to Ministry  of Commerce (EP Section) on the above subject  and to   say  that  in   the  circumstances  explained  therein, Government  of  India agree, in principle, to allow  you  to withdraw  from  the 100% Export Oriented Scheme,  for  which letter of permission No.  PER:163(91)/E.O.335(91) IL(MRTP), dated  18.12.1991 was granted to you for the manufacture  of viscose  staple  fibre  for  an annual  capacity  of  18,000 tonnes.  The withdrawal from 100% EOU Scheme will be subject to the conditions mentioned in the Annexure (attached).

     2.   After  you  have  complied  with  the  conditions mentioned   in   the  Annexure,   you  may   approach   your Administrative Ministry for issue of final debonding letter.

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     3.   As regards surrender of Letter of Permission  No. PER:163(91)/E.O.235(91)-IL/MRTP,   dated     18.12.1991,   a separate  communication will follow from the  Administrative Ministry (viz.  Ministry of Textiles  A&MMT Section), Udyog Bhawan, New Delhi.

     4.   All further correspondence in the matter, if any, may  please be addressed to the Administrative Ministry viz. Ministry  of  Textiles   A&MMT Section, Udyog  Bhawan,  New Delhi.

     5.  Please acknowledge receipt.

     Yours faithfully,

     Sd/- (Baldev Raj) Under Secretary to the Government of India."

     "Annexure

     STANDARD CONDITIONS GOVERNING WITHDRAWAL FROM 100% EOU SCHEME

     1)  The  undertaking shall pay all customs and  excise duties  on  the imported and Indigenous capital  goods,  raw materials,  components,  consumables and spares in stock  as well  as  on the finished goods in stock, together with  all penalties  and  other charges as per Customs Act and  Rules, before the issue of final debonding letter.

     2) The undertaking shall also deposit a penalty of 10% of  the  cif  value  of   imported  capital  goods,  towards non-fulfillment  of  export  obligation,   with  the  import licensing  authority  with  whom  it had  executed  a  legal undertaking  in  respect of the 100% Export  Oriented  Unit. This  penalty  shall  be  paid before  the  issue  of  final debonding letter.

     3) In case the undertaking has availed of the facility of  external  commercial  borrowings,   the  same  shall  be disinvested before the issue of final debonding letter.

     4) The undertaking shall obtain a fresh approval under the  current  Industrial Licensing Policy to  undertake  the proposal activity under domestic tariff area scheme.

     5)   The  undertaking  shall   undertake   an   export obligation of 25% of the annual production for a period of 5 years  or an amount equal to five times of the Cif value  of imports  whichever  is  higher.  For this purpose  it  shall execute  a  Legal  undertaking  with  the  Import  Licensing Authority concerned.

     6)  The undertaking shall also make such payment(s) as may  be necessary for all other major benefits that it might have availed of under 100% Export Oriented Scheme."

     When  the appellant received letter dated October  18, 1993  from  the  Ministry  of  Commerce  it  approached  the Assistant  Collector of Central Excise for valuing the goods and  the  duties  of  customs and  central  excise  payable. Appellant was informed by the Assistant Collector of Central Excise  by  his  letter No.   C.No.VIII/48/3/92-Cus.   dated

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November  8,  1993 that value of the goods and  duties  have been worked out and it was asked to pay the same.  Appellant was  also  informed that the assessment had been done  on  a provisional basis.  The dispute in the present case concerns the  finished goods which had been manufactured prior to the date of debonding of 100% EOU of the appellant.  There is no dispute  that  whole  of the duties of customs  and  central excise  as  demanded by the Assistant Collector  of  Central Excise  in  his  letter   No.   C.No.VIII/48/3/92-Cus  dated November  15,  1993,  had been paid and  which  amounted  to Rs.6,62,70,540.76.   It  is also not disputed that  all  the conditions  stipulated in the letter dated November 3,  1993 of  the  Government  of India in the Ministry  of  Industry, Secretariat  for  Industrial Approvals (SIA) have also  been complied  with  by  the appellant.  On February  2,  1994  a formal  letter was issued by the Ministry of Textile in  the Government  of  India  debonding the  appellant’s  unit  and permitting  it  to operate as a DTA unit.  This letter  took note  of  the  fact  that on the basis  of  the  provisional assessment  by  the  Assistant Collector of  Central  Excise appellant  had deposited the amount of duties of customs and central  excise  and the appellant had also been allowed  to clear  the  finished stock lying with it in its stock as  on November 16, 1993 as well as the production from December 8, 1993  onwards on provisional basis.  After the appellant had been  allowed  in  principle to withdraw from the  100%  EOU Scheme  by letter dated November 3, 1993 of the Ministry  of Industry it had recognised its manufacturing activities as a DTA  unit  from  December  6, 1993.   On  January  21,  1994 Assistant  Collector  of Central Excise issued a show  cause notice  to the appellant now seeking to assess the  finished goods  lying  in  the  stock on the date  of  debonding  and demanding  excise duty under proviso to Section 3(1) of  the Act.   It  would  appear  that the  Assistant  Collector  of Central  Excise had earlier demanded duty under main Section 3(1)  of the Act.  A corrigendum dated February 14, 1994 was issued  by the Assistant Collector of Central Excise to  the show  cause notice seeking now to demand duty in respect  of clearance  made  from November 16, 1993 to February 1,  1994 under proviso to Section 3(1) of the Act after deducting the duties   already  paid  by   the  appellant.   Yet   another corrigendum  was  issued  to the show cause  notice  by  the Assistant  Collector of Central Excise on February 21, 1994. By  his  order dated March 31, 1994 Assistant  Collector  of Central  Excise  passed  his order in original in  which  he agreed  with  the appellant to the extent that the  date  of debonding  should  be  taken as November 15, 1993  when  the appellant  paid  the applicable duties and not  February  2, 1994  when  formal  letter of debonding was  issued  by  the Ministry  of Textiles.  However, in respect of applicability of proviso to Section 3(1) of the Act Assistant Collector of Central  Excise decided the issue against the appellant  and accordingly   confirmed   the   duty  demanded.    Aggrieved appellant  filed  an appeal before the Collector of  Central Excise  (Appeals) under Section 35 of the Act.  Collector of Central  Excise  (Appeals)  agreed with  the  appellant  and decided  the  issue in its favour thus allowing the  appeal. Now  it was the Revenue which felt aggrieved.  Collector  of Central  Excise  filed appeal before the Appellate  Tribunal against  the  order  of  the  Collector  of  Central  Excise (Appeals)  under  Section  35B of the Act.  By  order  dated November  5,  1997 which is impugned, Tribunal  allowed  the appeal  of  the Revenue holding that it was the  proviso  to Section  3(1) of the Act, which was applicable.  We may note that  corrigendum  to show cause notice which was issued  on

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February  14,  1994  was later on dropped by  the  Assistant Collector  of  Central  Excise  himself.    Now  it  is  the appellant  which has come before this Court.  To  appreciate the  rival  contentions  we may consider the policy  of  the Central   Government  under  which   EOU  Scheme  came  into operation.    Under  Notification   No.   13/81-Cus.   dated February 9, 1981 as amended from time to time (as on October 15,  1992) and issued under sub-section (1) of Section 25 of the Customs Act, 1962, Central Government exempted specified goods   when  imported  into  India   for  the  purpose   of manufacture of articles for export out of India or for being used in connection with the production or packaging of goods for export out of India by 100% EOU approved by the Board of Approvals  (BOA) from whole of the duty of customs  leviable thereon  and  the  additional duty, if any, subject  to  the conditions  contained  in  the  notification.   One  of  the conditions  was  "on  the  clearance of  five  per  cent  of articles  so manufactured or such other percentage as may be fixed  by  the said Board, which are allowed to be  sold  in India,  being  in the nature of rejects, the importer  shall pay  a sum equivalent to the duty of excise payable on  such articles  under Section 3(1) of the Act, which have not been exported".   Benefit of the notification is to be availed of by  the  importer, if he exports out of India 100%  or  such other  percentage,  as  may be fixed by the said  Board,  of articles  manufactured  wholly or partly from the goods  for the  period stipulated by the Board or such extended  period as  may  be specified by the said Board.  On the  expiry  of this  period the importer is required to pay customs duty on the  imported  capital goods, material  handling  equipment, office equipment, captive power plants, etc.  on depreciated value  but at the rates prevalent at the time of import  and also  to pay customs duty on enhanced imported raw materials or  components on the value at the time of import and at the rates in force at the time of clearance.  Proviso to Section 3(1)  of the Act thereafter was inserted in Section 3 of the Act  by Act 14 of 1982.  A circular dated February 17,  1983 was   issued  by  the   Central  Government  clarifying  the introduction of proviso.  It applied to units in Kandla Free Trade Zone and Santa Cruz Electronics Export Processing Zone allowing  them to sell their goods not exceeding 25% of  the production  in  DTA on payment of excise duty equal  to  the duties  of  customs  leviable on like  goods  imported  from abroad.   Clearance to the DTA was to be allowed only  after necessary  permission had been obtained by the unit from the Development Commissioner/Administrator in-charge of the Free Trade Zone (FTZ).  The circular pointed out that in order to levy  excise duty equal to the duties of customs leviable on the  like goods imported from abroad, a proviso had  already been inserted in Section 3(1) of the Act.  In 1984 there was further  amendment to proviso to Section 3(1) of the Act  by Act  21  of 1984.  The effect of the amendment was that  the facility  of  sale in DTA was now extended to 100%  EOUs  as well.   On May 29, 1984 Central Government issued a circular explaining  further amendment to proviso to Section 3(1)  of the Act.  It said that the Central Government had decided to allow  100%  EOU  which had been approved by  the  Board  of Approvals  (BOA)  to sell their goods not exceeding  25%  of their  exportable  production  in the Domestic  Tariff  Area (DTA) on payment of appropriate duty of excise.  In addition these  undertakings could remove 5% of such other percentage of the goods, as may be fixed by the BOA provided such goods are  in  the  nature of rejects.  It was  pointed  out  that amendment  has  been carried out in proviso to Section  3(1) and that such of the goods would be liable to duty of excise

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equal  to  the  aggregate of the duties of customs  of  like goods   imported  from  abroad.    Circular  provided   that application  for  permission  to   sell  25%  of  exportable production should be certified by the Central Excise Officer indicating  the  quantity of goods which had  actually  been produced  or manufactured as on that date.  On June 18, 1992 a  Public Notice No.  16-ITC(PN)/92-97 was issued, being one of  the  import  and  export  public  notices,  laying  down guidelines for sale of goods in DTA by EOUs and units in the Export  Processing Zone (EPZs).  The Public Notice  referred to  the  export  and  import policies and  the  Handbook  of Procedures (1992- 97) providing for sale of goods in the DTA by  EOUs and units in EPZs up to 25% and then laid down  the guidelines  which  would govern sales in DTA.   This  Public Notice could not be applicable to EOU when it is debonded in view  of  the norms laid in Public Notice which could  apply only   to  the  unit  not   withdrawing  from  EOU   Scheme. Contention  of  the Revenue is that permission  to  withdraw from  scheme is itself a permission to sell in India,  i.e., when unit is permitted to debond, it would be deemed to have been  permitted  to  sell  the goods  in  India.   But  then permission  to  sell  in  India has to be  in  terms  or  in accordance  with the provisions of the export import policy. Permission  to  sell  in India by 100% EOU consists  of  all those  factors  like value addition, fulfillment  of  export obligation,  sale of a general currency licence holder, item being  not  mentioned  in the negative list and  then  there being  a  limit of 25%, etc.  When permission to  debond  is given,  none  of  these criteria or aspects are  applied  by Board  of  Approvals (BOA) to the closing stock of  finished goods.   Board of Approvals is a statutory authority,  which permits  debonding.   It  is created  under  the  Industrial (Development  and  Regulation)  Act.   On  the  other   hand permission  to  sell  the  goods  in  India  under  and   in accordance  with  the import policy has to be given  by  the Development Commissioner in the Ministry of Commerce.  Board of  Approvals  and  the  Development  Commissioner  are  two different   authorities   constituted   for  two   different purposes.   Permission  to  debond is a  statutory  function exercised  by  one statutory authority.  On the  other  hand permission  to sell in India is to be exercised by different statutory  authority.   If reference is made to para 102  of the   relevant  import  export   policy  permission  of  the Development  Commissioner is required for selling the  goods in  India  up to limit of 25% by 100% EOU.  Para 117 of  the policy  deals  with  debonding  of 100%  EOU.   Thus  it  is apparent  that debonding and permission to sell in India are two  different things having no connection with each  other. It  also becomes apparent that in view of the EOU Scheme  as modified  from time to time and corresponding amendments  to Section  3 of the Act the expression "allowed to be sold  in India"  in proviso to Section 3(1) of the Act is  applicable only  to  sales made up to 25% of production by 100% EOU  in DTA and with permission of the Development Commissioner.  No permission  is  required to sell goods manufactured by  100% EOU lying with it at the time approval is granted to debond. Revenue  has  proceeded on the assumption that by  debonding permission  has  been  granted by the BOA  for  selling  the closing  stock  of finished goods in India.  This cannot  be so.   BOA  does  not concern itself with the manner  of  the disposal  of the closing stock of the finished goods.  After debonding it is open to the erstwhile 100% EOU, which is now like any other manufacturing unit in India to sell the goods in India or export it by following the normal procedure.  By its  application dated September 8, 1993 appellant had  only

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asked  the  Central Government for permission to debond  the unit.    Pending  formal   debonding  clearance,   appellant requested  the Central Government that it might allow it  to sell  the goods in India.  This request of the appellant was never  acceded  to by the concerned authority and letter  of debonding  was  issued.  This application of the  appellant, therefore,  could  not  be  treated as  an  application  for permission  to sell in India as contended by the Revenue and the  debonding  letter  of the BOA cannot  be  construed  as permission  to sell in India.  Argument of the Revenue  that debonding assumes allowing all closing stock of the goods on the  date  of  debonding  to  be  sold  in  India  would  be stretching the matter a little too far.  Conditions for sale of  25% of the finished products by EOU and sale of finished stock  by  a debonded 100% EOU on the date of debonding  are different.  It was contended by Mr.  Lakshmikumaran, learned counsel  for the appellant, that under Rule 9A(1)(ii) of the Central Excise Rules framed under the Act duty is chargeable at the rate on the date of removal of the goods and not from the  date of their manufacture (See Wallace Flour Mills  Co. Ltd.  vs.  Collector of Central Excise, Bombay, Division III [(1989)  4  SCC 592]).  He said it is not material when  the goods  were manufactured and that it is the date of  removal for  sale  in India that matters.  He, therefore,  submitted that  central  excise  duty  could be charged  at  the  rate prevalent  at  the  time  when the goods were  sold  by  the appellant  in  India on the date when 100% EOU was  debonded which  would be the date for removal for sale in India.   We may also refer to the counter affidavit filed by the Revenue in  this  appeal.   It  is stated  that  in  December,  1991 appellant  started 100% EOU and was following all the  rules and  regulations set out for running an EOU.  Owing to  poor running  of the unit appellant applied for debonding of  the unit,  which was accepted in October, 1993.  The  Department issued  show  cause notices demanding duty on the  stock  of finished  goods  lying  on the date of debonding,  which  is equal  to  customs  duty leviable under Section  12  of  the Customs  Act, 1962 as per proviso to Section 3(1) of the Act which  provides for charging duty on 25% of goods sold by an EOU  in  DTA.  It will thus be seen that it is the stand  of the  Revenue itself that proviso to Section 3(1) of the  Act is  applicable  to  25%  of goods sold by  an  EOU  in  DTA. Concept  of  bonding  or debonding is well  understood  both under  the  Act  and  the Customs  Act,  1962.   The  entire operations  of  an EOU are to be in customs bonded  factory, unless   otherwise  specifically   exempted  from   physical bonding.   The  approved  unit  is  required  to  execute  a bond/legal  undertaking  with the  Development  Commissioner concerned in the form prescribed.  Under the conditions laid for  EOU,  bonding period for units under the EOU Scheme  is ten  years.  This period may be reduced to five years by the Board  of  Approvals  in case of products  liable  to  rapid technological  change.  On completion of the bonding  period it shall be open to the unit to continue under the Scheme or opt  out of the Scheme.  Such debonding is, however, subject to  industrial  policy  in force at the time the  option  is exercised.   On the satisfaction of the Board of  Approvals, EOU  may  be  debonded on its inability  to  achieve  export obligations,  value  addition or other  requirements.   Such debonding  is subject to such penalty as may be imposed  and levy of the following duties:  - (a) Customs duty on capital goods  at  depreciated value but at rates prevalent  on  the dates  of import;  (b) Customs duty on unused raw  materials and  components  on the value on the dates of import and  at rates in force on the dates of clearance.  Unless there is a

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specific  prohibition  EOU is permitted sale in the DTA  all rejects  up  to 5% production or such percentage as  may  be fixed  by  the  Board  of Approvals subject  to  payment  of applicable   duties   and  other   conditions.    DTA   sale entitlement  is 25%.  It is to be determined in relation  to the  ex-factory  value  of the total  production,  excluding permissible  levels of rejects.  DTA sale entitlement may be up  to  25%  of the total production provided the  value  of indigenous  constituents  of  the final  products  excluding water,  power,  services and spares for capital goods is  in excess  of 30% of the cost of the product.  Such entitlement may  be  up  to  15%  only   if  the  value  of   indigenous constituents  is  less than 30% of the total cost.   Chapter V-A  of  the  Central Excise Rules contains  provisions  for removal  from  a  free  trade Zone or from  a  100%  EOU  of excisable goods for home consumption.  This Chapter was made applicable  to units under the EOU Scheme by a  notification No.  130/84-C.E.  dated May 26, 1984.  This Chapter contains Rules  100A to 100H.  Rule 100A provides that the provisions of  this Chapter shall apply to a person permitted under any law  for  the time being in force to produce or  manufacture excisable  goods  in a 100% Export Oriented Undertaking  and who  has  been allowed by the proper officer to remove  such excisable  goods for being sold in India on payment of  duty of  excise leviable thereon.  It will be thus seen that this Chapter V-A would not be applicable where EOU is outside the EOU Scheme after the unit is debonded.  Under Rule 100H Rule 57A  and  other Rules mentioned therein shall not  apply  to excisable  goods  produced  or manufactured by  100%  Export Oriented  Undertaking.  Rule 57A relates to allowing  credit of any duty of excise or the additional duty under Section 3 of  the Customs Tariff Act, 1975 as may be specified by  the Central  Government  in the notification, paid on the  goods used  in  or  in relation to the manufacture  of  the  final products  and  for utilising the credit so  allowed  towards payment  of  duty of excise leviable on the final  products. Considering  the  whole aspect of the matter, we are of  the opinion that the Tribunal was not right in holding that duty is to be leviable in terms of the proviso to Section 3(1) of the  Central Excise Act, 1944.  We, therefore, set aside the impugned  judgment  of the Tribunal and restore that of  the Collector  of  Central Excise dated October 11,  1994.   The appeal  is accordingly allowed.  There shall be no order  as to costs.