TMI Blog2021 (5) TMI 665X X X X Extracts X X X X X X X X Extracts X X X X ..... o happen that EOU unit manufacturing more than one product may not be able to export all the products in the same proportion; the overseas market may not have demand for all the products manufactured by them. Understandably, EOU cannot be expected to throw away or destroy the product or sell in DTA at a higher rate of duty resulting in financial loss - as the EOU scheme is based on value of clearances, once export obligation is fulfilled, the manufacturer cannot be constrained to clear particular products in DTA in proportion to the export of the specific product - the goods cleared in DTA are to be held to be similar to those exported and that the 90% entitlement should be seen from the value of exported specific products and not a single product. Time Limitation - HELD THAT:- Development Commissioner has given permission or has been regularly intimated about the DTA clearances; similar intimations and returns have also been submitted to the jurisdiction Custom/CE authorities. The clearances in DTA were going on from 2009 onwards. CERA audit of the unit has taken place and note was issued on 21.05.2013 - As the appellants were regularly submitting intimations to the Developme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 13.40Cr E/86383/2016 01/2014 to 07/2015 13-14/SJB/COMMR/Th- II-2016 dt.16.03.2016 ₹ 3.06 Cr E/86033/2019 08/2015 NA/GST/A- III/MUM/283/18-19 dated 6.12.2018. ₹ 0.02 Cr 2. Brief facts of the case are that the appellants are EOU are manufacturers and exporters HDPE/LDPE/PP Ropes and Yarn. The appellants have achieved positive NFE and there is no dispute on this count. The appellants have also cleared Yarn and Ropes in DTA. On the basis of CAG audit conducted on the records of the appellants, department opined that in terms of Para 6.8[a] of the Foreign Trade Policy, built into condition 2 of the notification number 23/2003-CE dated 31-03-2003, EOUs are allowed to clear their finished goods into DTA ,involving value up to 50% of the FOB value of exports subject to fulfilment of positive NFE on payment of concessional duties of excise; within this entitlement of DTA sale , the EOU may sell goods which are exported or to be exported by them; EOUs which are manufacturing and exporting more tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16(T) (iv). TELCO 1998(97) ELT 439 (T) (v). Ranbaxy Laboratories 1997(92) ELT 400(T) (vi). Katyayani Exports 2003(156) ELT 497(T) (vii) Muthoot Apt Ceramics 2004(168) ELT 186 (viii) Falma Laboratory 1999(105) ELT 658(T). 3.1. She also submits that the appellants have indirectly exported twisted yarns as they have exported Ropes made of the same. The issue was considered in (i) Azad Coach Builders. 2010(36) VST 1 (SC) (ii) Mahindra Mahindra Ltd 2013(296) ELT 62 (T) and (iii) Indian Aluminium 1995(79) ELT 111(T) 3.2. She further submits that the appellants submitted all the details to the Development commissioner and all no objection has been raised. Development commissioner is the competent authority to decide whether goods are eligible for clearance in DTA. Learned Counsel for the appellants submits that they have not violated any provisions of FTP or the Notification; They have obtained letter of permission from Development Commissioner for the clearance of goods; Development Commissioner has not raised any objection at any point of time; clearances were against CT-3 which were not cancelled; they have regularly submitted ER-2 returns; as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpretation of paragraph 6.8(a) is absolutely incorrect; it is the misconception of law by the department that (i) for different specific products, the DTA sales of EDUs should be compared to the export of that specific/[particular product when calculating the 90% limit; (ii) the value of the DTA sales for each particular product manufactured must not exceed 90 % of the value of the Exported Goods. The Audit statement that the DTA Clearance of Twisted Yarn was more than 90% of the export of the same was only amplified by the department; she submits that misconceived provisions of Law would defeat the very purpose and intent of legislation. 4.2. The Appellants are manufacturing HDPE/LDPE/PP ROPES Twisted Yarns; Export of Ropes was larger than the Twisted Yarns; Appellant cleared Twisted Yarns to DTA within 90% of the FOB value of the exports of goods as per Para 6.8 (a) of FTP; Appellant has cleared twisted Yarn which is well within the prescribed limit of 90% of 50% of the total entitlement; this submission was put forward by the Appellant from the very first stage of reply to the department s audit objection itself. Submitting on the illustration given by the department, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IOL-302-SC-CUS-CB held that exemption notification needs to be strictly interpreted; a Literal interpretation of the second clause makes it clear that for different specific products, the DTA sales of EOUs should be compared to the exports of that particular product when calculating the 90% Limit, subject to an overall 50% Limit; Second Proviso tries to negate an attempt to reach this limit by large amount of export of any one product; if the argument that DTA sales of each of the products can be up to 90 % of entitlement, it would give rise to absurdity of entitlement being more than 100 % of FOB of exports. 5.1. Learned Authorised Representative (AR), further submits that the Appellant have taken the argument that Twisted yarn are similar to Rope for the first time before CESTAT and not before the Lower authorities. Order-in-original clearly states that the Twisted Yarn has been made mostly from inputs purchased from Domestic Tariff Areas (DTA) locally under the CT-3 while the Ropes are produced from duty-free imported yarn. Hence, Prima facie that the factual premise of the appellant argument cannot be substantiated; the products are entirely different; While Twisted Yarn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales for each of the specific products with respect to the Exports of that specific product; In the case of Consolidated Coin Pvt. Ltd [2013 (2) TMI 416], Tribunal was concerned as to whether Copper Alloy Coins and Copper Zinc Nickel Strips were similar products for the purposes of similarity of DTA clearances and Exports; it was held in Para 3 that the DTA clearances of coin blanks can be up to 90% of the FOB value of the clearances of the coin blanks as the total value of the DTA clearances is within the DTA entitlement of 50% of total FOB; department's view that the DTA clearances of coin blanks must be in the same proportion in which the coin blanks are exported is not correct. 5.5. Replying to the submissions on invocation of extended period, Learned AR submits that as a Star Export House, the appellants do not need prior permission for DTA sales as per the circular No 12/2005-Cus dated 04.03.2005; moreover, they were under Self- Sealing procedure; Jurisdictional Authorities became aware of the contravention of the policy when the records of the Appellant were subject to CAG Audit. He submits that the declaration given to the Development Commissioner, only stated tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand. We find that the appellants have based their submissions mainly contending that the items manufactured, exported and cleared in DTA by them are similar; the department has misread the provisions of Policy in finding that DTA sales limit of 90% would apply to each product separately, whereas the word used is products. 7. We find that a plain reading of the Paragraph 6.8 (a) of FTP (2019-14) would be beneficial. The paragraph reads as Units other than gems and jewellery units may sell goods up to 50% of FOB value of exports, subject to the fulfilment of positive NFE on payment of concessional duties. Within entitlement of DTA sale, units may sell in DTA, its products similar to goods which are exported or expected to be exported from units. However, units which are manufacturing and exporting more than one product can sell any of these products into DTA, up to 90% of FOB of export of the specific products, subject to the condition that total DTA Sale does not exceed the overall entitlement 50% of FOB value of exports for the unit, as stipulated above. 8. Learned Counsel for the appellant submits that the purpose of FTP and the notifications issued is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them to perform the same functions and to be commercially interchangeable with the goods which have been exported or expected to be exported having regard to the quality, reputation and the existence of trade mark and produced in the same unit by the same person who produced the export goods . The Board s Circular No. 85/95 dated 26-7-95 issued in this regard stands rescinded. 10. We find that the issue of similar goods came for discussion before various courts and tribunals. Coming to the question of similarity of goods, exported by the appellant, the appellants claim that as per the ratio of the decision of Tribunal in the case Meghmani Industries (supra) which was followed by the Tribunal in Consolidated Coins Co (supra), similarity does not mean being identical. We find that Tribunal in the case of Madras Aluminium Co. Ltd. (supra) held that the words similar cannot be restricted to mean same or identical ; instead when wider meaning is given to the words similar it will encompass the goods broadly falling within the same class or category. We also find that in the case of Hindustan Motors (supra), Tribunal held that the word similar needs to be given a wider m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollows. 4. We have considered the submissions made by both the sides. Applicability of extended period in our opinion is not sustainable in this case when the appellant has submitted returns which would show exemption notification availed by them, it cannot be said that there was any suppression or mis-declaration once the details of exemption Notification is given. Central Excise officer who is receiving the returns would be able to check up whether the clearances by the appellants were in terms of the notification or not. Since the condition of the Notification are known to the officer as well as the appellants. When all available information is submitted, if the departmental officers choose not to take any action under the Notification, unless the department is able to show that in the return or in the declaration made by the appellants there were any omissions or commissions which would have prevented, the officer to find out the correct case, extended period cannot be invoked. In this case no evidence has been brought out to show that return/documents declarations were incomplete or facts were suppressed or misdeclared in the order. Further, it was also submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner has to consider all these facts and give finding on the issues. Therefore, we remand the matter to the Original Adjudicating Authority, who shall consider in respect of each item the eligibility in DTA and also which meaning of similar goods to be adopted. We have already held that extended period cannot be applied. Appellants are to be given proper opportunity to present their case before the final decision is taken. 12. Though in the above case, the above case is in respect of stay, the view of the tribunal has been made categorically clear on the issue of similarity of goods and admissibility of extended period of limitation. Tribunal in the case of Hindustan Lever Ltd. 2011 (268) ELT 252 (Tri-Chennai) has opined that fresh mushrooms and processed mushrooms even though classifiable under separate chapter headings belong to the same class of goods and both are similar. In view of the above discussion, the permission letter given by the development commissioner, grouping of both the items under one category under SION and the case law cited, we find that the appellant s contention on the similarity of goods exported/ sold in DTA merits acceptance and we uphold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o a value of ₹ 7.5 lakhs or product 'B' upto a value of ₹ 11.25 lakhs provided the total value of sale by the unit (of A B together) into DTA under concessional duty rate does not exceed ₹ 12.5 lakhs. 14. The appellant submits that the learned Commissioner has reproduced the paragraph of the policy in a wrongful manner; the impugned order conveniently uses the word specific product instead of specific products ; correct word used in the policy is products ; change of word from products to product resulted in wrongful interpretation of the entire provisions; simple and plain reading of the provision reveals that those EOU units which are engaged in manufacturing and exporting more than one product, can sell any of these products into DTA up to 90% of the total FOB value of all the goods exported by the appellants; in other words, if an EOU is engaged in manufacturing more than one product, the DTA entitlement limit for each of the product will be 90% of the total Export made subject to overall limit of 50%. The appellants argue that Notification 23/3003 CE dated 31.03.2003 provides that exemption shall be availed if the goods are cleared to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y department as part of turbo charger which are parts of automobile, then precision automotive components also being part of automobiles should fall in the same class, since they are engaged in manufacture and export of various part of automobile as stated in the green card. Further, as per the table given in paragraph 2 above, the appellant has cleared in DTA bearing housing only. Precision automotive competent was not cleared in DTA. In paragraph 6.8 what is stated is that when more than one product is exported such unit can clear in DTA up to 90% of value of such specified goods provided the total DTA sale does not exceed 50% FOB value of exports of the unit. The appellant have sold 90% FOB of value of export of bearing housing in DTA and has not exceeded 50% of FOB value of the unit since there is no DTA sale of precision automotive component. The condition is therefore fully satisfied. The denial of concessional rate of duty as per the notification is unjustified. The demand raised cannot sustain and requires to be set aside, which we hereby do. The impugned order is set aside and the appeal is allowed with consequential relief if any. 16. In the case of ABI Turna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d notification gets satisfied so long as the parts that they exported and the parts cleared into DTA are both like components of turbine charger. 17. In the case of Consolidated Coin Company Pvt. Ltd. 2013 TIOL-139-CESTAT-DELHI Tribunal held that as regards the third point of dispute since hte items exported by the appellant the copper alloys coins blanks and copper zinc nickel strip are the similar products, both falling under heading 7409 and since the DTA Clearances are within the overall entitlement of 50% of the FOB value of the exports, in accordance with the provisions of para 6.8(a) of the FTP the DTA clearances of any one of these products can be made up to 90% of the FOB value of the export. The DTA Sales of coper alloy coin blanks are well within 90% of their clearances. In view of this, the third objection of the department also does not appear to be valid and as such the duty demand of ₹ 83, 23,000/- does not appear to be sustainable. 18. In terms of paragraph 6.8(a) of the FTP units which are manufacturing and exporting more than one product can sell any of these products into DTA up to 90% of FOB value of export of the specific products, subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put to ensure that there is export of all the products manufactured and to ensure that a product which is not at all exported is not cleared in DTA. We find that, as the EOU scheme is based on value of clearances, once export obligation is fulfilled, the manufacturer cannot be constrained to clear particular products in DTA in proportion to the export of the specific product. This appears to be the understanding of the tribunal in the series of judgments cited above. Moreover, the facts and circumstances of the instant case being similar to that of the cases cited above, we find that the goods cleared in DTA are to be held to be similar to those exported and that the 90% entitlement should be seen from the value of exported specific products and not a single product. By following the ratio of the cases, we find that the DTA clearances of the appellants are in order. 20. Coming to the third submission of the appellants that the substantial portion of the demand is time barred, we find that Development Commissioner has given permission or has been regularly intimated about the DTA clearances; similar intimations and returns have also been submitted to the jurisdiction Custom/C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance which acknowledged that payment of customs duty could be made by using the duty credit scrips. In particular it was pointed out that the expression duty free credit scrip had been used incorrectly and that the correct phrase should have been duty credit scrips . It was suggested that the insistence by C.B.E. C. that goods imported by use of SFIS scrip may not be alienated unconditionally, even after three years of import, can be attributable to this inadvertent choice of words. Importantly it was pointed out that the scrip itself is a benefit that has been earned . This also answers the misconception of the DoR that customs duty can only be paid in cash, and that use of duty credit scrips is only revenue foregone . The position has been explained by the Madras High Court in Tanfac Industries Ltd. (supra), where it was held that the goods cleared by using DEPB scrips for payment of duty should be treated as duty payable goods and not as duty exempted goods. 22. In view of the above discussion and following the ratio of cases of Meghmani Dyes Intermediates Ltd 2013 (288) ELT 514 (Guj); Emcure Pharmaceuticals Ltd2014 (307) ELT 180 (Tri-Mum) and Surya Life Scie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing and Precision components were similar goods. In the instant case as per above discussion we held that Twisted yarn and Ropes are under the same category of goods under SION and can be held to be similar goods in the broader sense of the word. Therefore, we find that the case is in no way in favour of the Revenue. Learned Authorised Representative for the Revenue, countering the cases cited by the appellants to explain the similarity of nature of goods, submitted that the issues discussed therein are different. While we agree with this contention we hold that the cases can be relied as far as the understanding of similar goods is concerned. Therefore, we find that the contentions of Revenue are not acceptable and the ratio of the cases cited is valid to arrive at the conclusion that the impugned goods are similar in nature. Learned Authorised Representative for the Revenue further sought to rely on the case of Shri Dilip Kumar and others. We are of the considered opinion that the issue doesn t pertain to interpretation of a Notification but interpretation of Provisions of the Policy. As discussed above, the implementing authority, the Development Commissioner has not raised any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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