TMI Blog2003 (12) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... Bhagatram Parmanand another 100% export-oriented unit, who had made it out of imported polyester yarn that it received without payment of duty and supplied to the appellant in terms of exemption 1/95. The fact of such receipt was accepted by Om Prakash Agarwal, the proprietor of Bhagatram Parmanand and authorised signatory of Opal Fabrics. Agarwal accepted that the yarn was sold by Opal Fabrics to various persons without filing the proper document and without payment of duty. Some quantities of yarn was also recovered from Suman Traders, Harish Traders and others at Surat and seized. 3. In addition, the officers found that Opal Fabrics had cleared the grey fabrics manufactured by it rejects of such grey fabrics and waste of yarn that arises during the manufacture of the fabric to various buyers in the domestic tariff area at the rate of duty contained in Notification 2/95 i.e. 50% of the aggregate of the customs duty payable on such material had it been imported. Opal Fabrics had not physically exported any of its yarn that it manufactured. 4. The notice issued to Opal Fabrics therefore demanded excise duty equal to the aggregate of customs duties leviable of Rs. 7,07,195/- on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also visited on 24-5-2000 the premises of Bhagatram Parmanand another 100% export-oriented unit licence for the manufacture of twisted yarn. They found a shortage of a little over 90,000 kg. in the stock of the polyester filament yarn which is raw material imported by it without payment of customs duty in terms of Notification 53/97. Notice issued to this appellant proposed recovery of customs duty of Rs. 35.68 lakhs approx. which had been paid on this quantity of yarn and also proposed to deny the benefit of the exemption contained in Notification 2/95 for the quantities of twisted yarn and rejected waste cleared to the domestic tariff area on the ground that the appellant had not physically exported any quantity of twisted yarn. 9.The Counsel for the appellant contends with regard to the demand for customs duty that verification of the stock by the officers has not resulted in a clear position that the duty was demanded only on the shortage of imported yarn. The appellant had in addition to importing such yarn had obtained such yarn locally. 10. We are not able to accept this contention. The Commissioner records the admission of Om Prakash Agarwal, the proprietor of Bhagatra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The entire production of EOU/EPZ/EHTP/STP Units shall be exported subject to the following : Unless specifically prohibited in the LOP/LOI, rejects may be sold in the domestic tariff area (DTA), on the basis of records maintained by the unit and on prior intimation to the customs authority. Such sale above 50% of the FOB value of exports shall be counted against DTA sale entitlement under Paragraph 9.9(b) and (d) of the Policy. Sale of the rejects shall be subject to payment of applicable duties. DTA sale up to 50% of the FOB value of exports may be made subject to payment of applicable duties and fulfilment of minimum NFEP prescribed in Appendix I of the policy. In the case of EOU/EPZ units in toys, agriculture, including agro-processing, aquaculture, animal husbandry, biotechnology, floriculture, horticulture, poultry, viticulture and sericulture such sale may be subject to positive NFEP only. No DTA sale shall be permissible in respect of motor cars, alcoholic liquors and such other items as may be stipulated by Director General of Foreign Trade by a Public Notice issued in this behalf. Other Supplies DTA9.10 The following supplies in DTA shall be counted towards fulfil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... board the value of exports made" during the financial year. The words "export made" occurring in the clause cannot, in our view, apply to goods other than the goods physically exported out of India. That is the natural and literal meaning of these words. Making of the export will not arise when the goods are not exported, but, by a provision of law, counted towards fulfilment foreign exchange earning of the unit. Confusion appears to have been caused at least in part by the use of expression "deemed exporting Paragraph 10.2 of the Policy. Such "deemed exports" are of significance only for the purposes of the benefits that accrue in respect of them specified in Paragraph 10.3. There is nothing in the Policy or in the notification that could lead to one to conclude that the value of goods other than the goods exported should be taken into account in determining the 50% specified in Clause (b) of the proviso to the notification. To consider that value of such goods should be included would be contrary to the plain and simple meaning of the words of Clause (b) of the proviso. Further, it is settled law that the words of an exemption must be construed strictly. 16.In point of fact, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 50% of the FOB value exports referred to in Clause (b) under the proviso will include not only the finished goods of prime quality, but rejects, scrap, waste and remnence. 19.Counsel for Angana Textiles P. Ltd. contends that if it is held that the clearances made are in excess of the permission granted by the Development Commissioner, the goods could not be said to have been allowed to have been sold in India. It would then follow that duty specified in the proviso under sub-section (1) of Section 3 of the Central Excise Act, 1944 will not apply. The exemption contained in Notification 125/84 will be available. Reliance is placed upon the judgment of the Supreme Court in SIV Industries Ltd. v. CCE, 2000 (117) E.L.T. 281 a Circular No. 618/9/2002-CX., dated 13-2-2002 of the Board issued subsequent to the judgment and the decision of the Tribunal in Kuntal Granites (P) Ltd. v. CCE, 2001 (132) E.L.T. 214. 20.This contention is not acceptable for more than one reason. Firstly, the goods cleared by Angana Textiles were rejects and wastes. There is no requirement in any of the paragraph of the policy for taking prior permission for clearing rejects and wastes to the domestic tari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eared in terms of Paragraph 9.9, but Paragraph 9.10, which clause did not figure in the notification, they would not be entitled for the exemption. The Tribunal on its view that clearance under Paragraph 9.9 would include all manner of clearance whether by way of exports, domestic supply and further noting that the payment for such goods would be in foreign exchange, and therefore held that the benefit of exemption could not be denied to such goods. The Tribunal, in that case, was not concerned with the question that arises here - what is proportionate in value terms, of the production of 100% EOU i.e. entitled to exemption in terms of the Notification? Therefore, the ratio of that decision will not apply to the facts now before us. 23.In Ginni International v. CC, the Tribunal taking note of words of Notification 8/97, concluded that in determining the extent of entitlement to exemption, it is the decision of the Development Commissioner that is determinative and the customs authorities did not have the power to question his decision. Notification 2/95 is not similarly worded as Notification 8/97. On the other hand, the third proviso make it clear that it is the Deputy or Asstt. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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