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Commnr. Of Central Excise Versus Morarjee Brembana Ltd.

2015 (4) TMI 354 - SUPREME COURT

100% EOU - DTA clearance - Valuation of goods Rule 4 or under Rule 7 of the Customs Valuation Rules, 1988 - Benefit of Notification No.8/97-CE dated 1.3.1997 or Notification no.2/95 CE - manufacturing of cotton fabrics - additional ground raised for the first time in the miscellaneous application was allowed by the tribunal - Held that:- Tribunal was not entirely wrong in allowing the respondent to raise the issue of valuation. It is because of the reason that in the Order-in-Original passed by .....

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spect is concerned, namely, applicability of Rule 4 of the Valuation Rules, appears to be correct. While undertaking this limited enquiry into the said question, the Tribunal decided a pure question of law.

In cases where excisable goods are produced or manufactured by hundred per cent export oriented undertaking are allowed to be sold in India, the duty of excise has to be the amount equal to the aggregate of the duties of customs which would be leviable under Section 12 of the Custo .....

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tain factual aspects which had to be gone into. The Tribunal has made certain observations on facts but without any material before it. The appropriate course of action for the Tribunal, in such a given situation was to remit the case back to the Commissioner to decide the issue after allowing the appellant to produce evidence in this behalf. - Matter remanded back - Decided in favour of Revenue. - CIVIL APPEAL NOS. 8182-8185 OF 2003, CIVIL APPEAL NO. 9178 OF 2003 and CIVIL APPEAL NO. 288 OF 200 .....

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Mr. Mohan M.Myakar,adv. Mr. Javed Muzaffar,Adv. Mr. Karan Adik,Adv. Mr. S.A.Desai,Adv. Mr. Akash Kakad,Adv. Ms. Anagha S. Desai,Adv. ORDER In C.A.No. 8182-8185/2003 The respondent/assessee herein is engaged in the manufacturing of cotton fabrics falling under Chapter Heading 52.07 of the Schedule to the central Excise Tariff Act, 1985. It is hundred per cent Export Oriented Unit (EOU). The respondent had been clearing the goods i.e. cotton fabric in Domestic Tariff Area (DTA) taking benefit of .....

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on Order-in-Original dated 13.10.2000 was passed by the CCE confirming the aforesaid demand and imposing the penalty of ₹ 48 lakhs. We may mention here that the period involved was from May 1998 to February 2000 and 3rd December 1998 to 22nd August 2000 in the show cause notices. The respondent filed appeal against the aforesaid order of the Commissioner before the CEGAT, Mumbai. It is clear from the above that issue pertained to the applicability of Notification nos. 2/95 or 8/97. As note .....

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f the said appeals, the respondent filed miscellaneous application wherein it sought to raise certain additional grounds. One of the grounds was that even if Notification 8/97 is applicable, valuation of the goods should be worked out under Rule 7 of the Customs Valuation Rules, 1988. This miscellaneous application was opposed by the Department by filing its objections, inter alia, stating that it was not the issue raised in reply to the show cause notices and was not the subject matter of the O .....

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rendered by the Tribunal, it has decided two issues. The first issue was as to which Notification would be applicable. That issue has been decided against the respondent and the Order-in-Original of the Commissioner holding that Notification No.2/95 is applicable, is upheld. Thereafter, the Tribunal discussed the issue of valuation and recorded a finding that in the present case it was not possible to determine the transaction value in terms of Rule 4. Rule 3 of the Customs Valuation Rules provi .....

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nts and find considerable force in their submission. The circular of the Board also realized the fact that the value is required to be determined in terms of Rule 8 i.e. best judgment rule. The sales price charged to customer in India of the goods under assessment can not be considered as a price in the course of international trade. The appellants contention that the FOB price of the export of goods or similar nature various from country to country also has considerable force. It is well known .....

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herefore it is very difficult to establish the similarity of the imported fabrics and the fabrics manufactured by the appellants. Rule 7 is meant for computing the value when the imported goods are sold in India. As per the provisions of the said rule from the sales price certain expenses and profit is required to be deducted. Further the duty and taxes payable by any importer in normal course of importation is required to be deducted." It is clear from the above that insofar as second cont .....

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act. He read out the portion extracted above where the Tribunal itself has made certain factual observations, namely, the manufacturer is able to realize higher amount for sales made to developed countries like America, U.K, France, etc. and the price which is realized from the export made to underdeveloped countries like Bangladesh, Malaysia is less. It is also observed by the Tribunal that the value of fabric not only depends upon the quality of yarn, count of yarn, but also on the design of f .....

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ose of arriving at the valuation of the goods, matter should have been remanded back to the adjudicating authority for this purpose. We find force in the aforesaid submission of learned counsel for the Revenue. We may like to observe here that the Tribunal was not entirely wrong in allowing the respondent to raise the issue of valuation. It is because of the reason that in the Order-in-Original passed by the Commissioner, after holding that the Notification no.2/95 would be applicable and the re .....

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rrect. While undertaking this limited enquiry into the said question, the Tribunal decided a pure question of law. Mr. Radhakrishnan has,however questioned the aforesaid view of the Tribunal and argued that since the respondent is hundred per cent export oriented unit, any sale or clearance of cotton fabric by the respondent to DTP should be treated as transaction sale and therefore Rule 4 would be applicable. However, this argument has to be rejected in view of proviso to Section 3 of the Centr .....

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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 Indi .....

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ertaking are allowed to be sold in India, the duty of excise has to be the amount equal to the aggregate of the duties of customs which would be leviable under Section 12 of the Customs Act, on like goods produced or manufactured outside India if imported into India and where the said duties of custom are chargeable by reference to their value, the value of such excisable goods shall be determined, in accordance with the provisions of the Customs Act and Customs Tariff Act, 1975. Keeping in view .....

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