NAHAR INDUSTRIAL ENTERPRISES Vs. COMMR. OF C. EX.

JUDGEMENT

(1.) THE issue involved in this appeal filed by M/s. Nahar Industrial Enterprises is whether the value of waste will form part of the 50% value of the physical export up to which the goods can be cleared by 100% Export Oriented Undertaking to Domestic Tariff Area (D.T.A.).

(2.) SHRI Harbans Singh, learned Advocate, submitted that the Appellants are a 100% EOU manufacturing cotton yarn; that they had exported the goods valued at Rs. 4,618.27 lakhs during the financial year 1999 -2000 and accordingly, they were eligible to sell the goods into Domestic Tariff Area to the extent of Rs. 2/309.14 lakhs during the financial year 2000 -2001; that they cleared the cotton yarn valued at Rs. 21.55 crore during the financial year 2000 -2001 on payment of duty under Notification No. 8/97 -CE., dated 1 -3 -97; that they also cleared during the same period the cotton waste valued at Rs. 6.5 crore (approximately) under Para 9.20 of the EXIM Policy claiming the exemption from duty under Notification No. 6/97 -C.E., dated 1 -3 -97; that the Commissioner of Central Excise, under impugned order has demanded the Central Excise duty and imposed a penalty on the ground that the total DTA sale of finished goods, rejects and waste are allowed up to 50% of the FOB value of physical export and the Appellants had cleared the goods in excess of 50% into Domestic Tariff Area. Learned Advocate, further, submitted that as per Para 9.9(b) of the Export and Import Policy, the DTA sale of 50% of the FOB value of the export is permissible; that as per Para 9.9(a) rejects may be sold in the Domestic Tariff Area and such sale shall be counted against DTA sale entitlement under Para 9.9(b) of the Export and Import Policy; that in respect of waste, Para 9.20 of the Policy is relevant which provides that scrap/waste/remnants arising out of production process or in connection therewith may be sold or disposed of in the DTA; that it is thus evident that it was only rejects mentioned in Para 9.9(a) which were subjected to limit specified in Para 9.9(b) of the Policy; that Para 9.20 simply allows DTA sales of scrap/waste/remnants in the DTA on payment of applicable duties and no limit was prescribed and also no reference of limit specified under Para 9.9(b) was made; that it has been clarified by the Development Commissioner, Noida Export Processing Zone (NEPZ) under letter dated 19 -12 -2000 that "sale of waste/scrap/remnants arising out of production process is to be governed by Para 9.30 of Hand Book of Procedures and as such it is not to be included in the DTA sale permission"; that even the Department accepted the clarification given by the Development Commissioner/ NEPZ which is apparent from the Central Excise Division's letter dated 7 -3 -2001 to the Range Superintendent wherein it is mentioned that the sale of waste is allowed under Para 9.30 of Hand Book of Procedure. The learned Advocate also mentioned that Para 9.20 of the Policy was amended with effect from 1 -4 -2001 and overall ceiling of 50% FOB value was also made applicable to scrap/waste/remnant; that there is no provision made in the amended Policy to give effect to it retrospectively; that the Commissioner in the impugned order has relied upon the Board's Circular No, 30/99 -Cus., dated 25 -5 -99 wherein it is mentioned that DTA sale on all accounts for all sectors shall not exceed 50% of the FOB value of previous financial year's export; that the Commissioner has given his finding that the words 'oh all accounts' obviously, includes clearances of waste also. The learned Advocate contended that the Adjudicating Authority has erred in holding that there was no material change in the EXIM Policy as it existed prior to or subsequent to 1 -4 -2001 and the specific mention of overall ceiling of 50% of FOB value under Para 9.20 appears to have been made in the amended Policy with effect from 1 -4 -2001 as a measure of abundant caution; that the amendment being of substantive nature cannot be treated to be clarificatory and thus cannot be given retrospective effect. Finally he has submitted that the waste and reject are two different terms and they cannot be treated as synonymous.

(3.) COUNTERING the arguments, Shri V. Valte, learned SDR submitted that the total DTA sale of finished goods, rejects and waste are allowed only up to 50% of the FOB value of physical exports; that this fact was also clarified by the Board under Circular No. 30/99 -Cus., dated 25 -5 -99; that as the Appellants had effected the clearances in the DTA of goods in excess of 50% of the FOB value of export made during the preceding financial year, the duty has been correctly confirmed against them. The learned SDR, further, mentioned that as 50% limit for effecting the clearances to the DTA include clearances on all accounts, there is no relevance in the submissions of the Appellants that they had cleared the waste and not rejects and further rejects and waste are not two different terms.