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2016 (3) TMI 380 - CESTAT MUMBAI

2016 (3) TMI 380 - CESTAT MUMBAI - 2015 (330) E.L.T. 727 (Tri. - Mumbai) - 100% EOU - sale of goods in Domestic Tariff Area (DTA) without following the guidelines - Customs duty is chargeable on fresh cut flowers grown and cleared by the appellant in DTA in terms of Notification No. 126/94-Cus., dated 3-6-1994 % or otherwise - Held that:- As per this provisions a clear distinction between excisable goods and non-excisable goods were made. When excisable goods are manufactured then the excise dut .....

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t. The said Cut Flowers are not excisable, firstly there is no question of any payment of excise duty or customs duty on Cut Flowers. If at all any duty liability is there it should be on the imported goods which is used for production, manufacture or packaging of cut flowers. In the instant case, it is not case of Revenue that the appellant have used any imported material for growing or packaging of cut flowers. Therefore there is no question of any demand of customs duty. In any case, the dema .....

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cided in favour of assessee - E/455-459/2005-Mum - Final Order Nos. A/2454-2458/2015-WZB/EB - Dated:- 5-8-2015 - Shri P.K. Jain, Member (T) and Ramesh Nair, Member (J) Shri N.N. Prabhudesai, Superintendent (AR), for the Appellant. Shri V.M. Doiphode, Advocate, for the Respondent. ORDER [Order per : Ramesh Nair, Member (J)]. - These five appeals by the Revenue, are directed against the Order-in-Appeal No. P-I/74 to 78/2004, dated 12-7-2004 passed by the Commissioner (Appeals) of Central Excise, P .....

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leviable thereon; that the respondent have contravened the para 9.9 of EXIM Policy 97-02 read with para 102 of EXIM Policy 92-97 inasmuch as they have not properly followed the guidelines for the sale of goods in Domestic Tariff Area (DTA) by an E.O.U./E.P.Z. unit as provided in the Appendix 42 of Hand-Book of Procedure 97-02 and provisions contained in para 3 of Customs Notification No. 126/94-Cus., dated 3-6-1994; that the permission from the Development Commissioner of the EPZ for DTA sale ha .....

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2001, dated 1-8-2001, 98/2001, dated 26-11-2001, 44/2000, dated 10-3-2000, 110/2003, dated 27-11-2003 and 59/2001, dated 19-9-2001 confirmed the duty demands in terms of Notification No. 126/94-Cus., dated 3-6-1994 and also imposed penalty under Rule 173Q. Aggrieved by the aforesaid Orders-in-Original the respondent preferred appeals before the Commissioner (Appeals) who vide the impugned order dated 2-7-2004 set aside the adjudication orders and allowed the appeals of the respondent. Being aggr .....

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re not excisable, are to be sold in India on payment of Customs Duty on the said goods used for the purpose of production, manufacture or packaging of such articles in an amount equal to the customs duty leviable on such articles as if imported as such. Under this legal position, the respondent is liable to pay customs duty on the Cut Flowers sold in DTA. The ld. Commissioner (Appeals), therefore, erred in holding that duty cannot be demanded in respect of Cut Flowers grown by 100% EOU and clear .....

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sustained. Therefore, present case on identical facts and issue, the Customs duty is chargeable from the respondents. He prays, the impugned order be set aside and Original orders be restored. 4. On the other hand Shri V.M. Doiphode, ld. Counsel for the respondent submits that in the present case the duty was sought to be demanded in terms of Notification No. 126/94-Cus. There is no dispute that the final product of the respondent i.e. Fresh Cut Flowers is not excisable as the same does not .....

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artment to demand duty on non-excisable final products but it only provides that in case of final product being non-excisable, Customs duty equal to amount of duty leviable on the inputs can only be demanded. Moreover, this is not the case of the Revenue that the respondent have imported any input or packaging material for use in the growing/producing/packaging the final product i.e. Cut Flowers. Therefore, in terms of the condition of the said notification, no duty is leviable on the cut flower .....

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Commissioner of C. Ex., Pune v. Abbound Bio-Agri Technologies Ltd. [2014 (307) E.L.T. 305 (Tri.-Mum.)] 2. Commissioner of Central Excise, Pune-I v. Soex Flora P. Ltd. [2014 (300) E.L.T. 256 (Tri.-Mum.)] 3. Commissioner of Central Excise, Pune-I v. Neha International Ltd. [2015 (315) E.L.T. 89 (Tri.-Mum.)]. 5. We have carefully considered the submissions made by both sides and perused the records. 6. The issue to be decided by us is that, whether customs duty is chargeable on fresh cut .....

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n, manufacture or packaging of articles and such articles (including rejects, waste and scrap material arising in the course of production, manufacture or packaging of such articles) even if not exported out of India are allowed to be sold in India under and in accordance with the Export-Import Policy and in such quantity and subject to such other limitations and conditions as may be specified in this behalf by the Development Commissioner, on payment of duty of excise leviable thereon under sec .....

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e of production, manufacture or packaging of articles and such articles even if not exported out of India are allowed to be sold in India on payment of duty of excise leviable thereon under Section 3 of the Central Excises and Salt Act, 1944. However if such articles are not excisable, then customs duty on the imported goods used for the purpose of production, manufacture or packaging of such articles, an amount equal to the customs duty leviable on such articles as if imported as such, should b .....

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used for production, manufacture or packaging of such article are required to be paid. In the present case the final product is Cut Flowers which is sold in DTA market. The said Cut Flowers are not excisable, firstly there is no question of any payment of excise duty or customs duty on Cut Flowers. If at all any duty liability is there it should be on the imported goods which is used for production, manufacture or packaging of cut flowers. In the instant case, it is not case of Revenue that the .....

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evant paras of the cited judgments are reproduced below : Abbound Bio-Agri Technologies Ltd. 4. We have carefully considered the submissions made by both the sides. Notification 126/94 grants exemption to inputs imported for the production, manufacture or packaging of articles for export purposes. One of the conditions stipulated for availing the benefit of exemption is that if the articles which are manufactured/produced are not excisable and are not exported, then customs duty can be dema .....

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to DTA. In the present case, the show cause notice proposes to demand excise duty on cut-flowers which are not excisable. Therefore, the provisions of Notification 126/94 has no application. 4.1 This Tribunal in the case of Cosco Blossoms Pvt. Ltd. v. Commissioner of Customs [2004 (164) E.L.T. 423] dealt with a similar situation and held that, goods produced in an EOU cannot be treated as imported goods and only excise duty under Section 3 of the Central Excise Act is payable and customs du .....

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x Flora P. Ltd. 3. The issue involved is relating to the demand of issue of cut flowers grown in India by 100% EOU and cleared for DTA sales. The Revenue was of the view that in the light of Notification No. 126/94, dated 3-6-1994, the respondents are liable to pay duty on inputs procured duty-free which were used in clearance of DTA sales. Further, in the show cause notice, demand has been raised under Section 11A of Central Excise Act, 1944. The learned Commissioner (Appeals) relying on L .....

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.T. 324 (Tri.-Del.) and CCE, Pune-I v. Horizon Flora India Ltd. - 2013-TIOL-203-CESTAT-MUM in support of his contention. 6. Considered the submissions made by both the sides. 7. We find that the case law relied on by the learned AR deals with the demand under the Customs Act. Admittedly, in these matters duty has been demanded under the Central Excise Act. Therefore, the case law relied on by the learned AR are not relevant to the facts of these cases. We do agree with the observation .....

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ase of the respondent was that they have not availed any concession on indigenous inputs/raw materials and also did not use any imported inputs/raw materials. The Commissioner (Appeals) held that cut flowers are non-excisable and neither Customs duty nor Central Excise duty is demandable on the cut flowers cleared into DTA. The Commissioner (Appeals) relied on Vikram Ispat v. CCE, Mumbai-III - 2000 (120) E.L.T. 800 (Tri.-LB) in which it was held that Customs duty is not leviable on DTA sales and .....

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ption contained herein shall also apply to - (a) the said goods which on importation into India are used for the purposes of production, manufacture or packaging of articles and such articles (including rejects, waste and scrap material arising in the course of production, manufacture or packaging of such articles) even if not exported out of India are allowed to be sold in India under and in accordance with the Export-Import Policy and in such quantity and subject to such other limitations .....

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exemption under this notification, shall be payable at the time of clearance of such articles. 3.1 Revenue has also appealed on the ground that in the case of Cosco Blossoms Pvt. Ltd. (supra) this Tribunal observed that however we make it clear that the Revenue authorities will be at liberty to demand duty on the imported inputs if any used in the production of the cut flowers in question . 4. None appeared for the respondent. Heard the submissions of the learned AR for the Revenue. We .....

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nto India. Therefore, the law is very clear. What is charged on domestic clearances by 100% EOU is duty of excise. In this case the goods namely cut flowers are non-excisable. The judgments cited by the Commissioner support this obvious interpretation of Section 3. Revenue s appeals on the ground that the Notification provides otherwise is not acceptable because a Notification cannot override the basic provision of law for charging duty. Revenue s reference to Cosco Blossoms Pvt. Ltd. (supra) to .....

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