M/S. VIRLON TEXTILE MILLS LTD. vs COMNR. OF CENTRAL EXCISE, MUMBAI

The Supreme Court ruled that under the proviso to sub-section (1) of Section 3 of the Central Excise Act, 1944, a 100% Export Oriented Unit (EOU) must pay excise duty equivalent to the customs duties applicable to similar goods imported into India, as per Section 12 of the Customs Act, 1962. The Court upheld the Tribunal's decision that the appellant was liable for duty on yarn sales under para 9.10(b) of the Exim Policy, rejecting claims for exemption under notification No. 2/95-CE. The outcome confirmed the demand for Rs. 33.58 lacs in duties owed by the appellant.