COSCO BLOSSOMS PVT. LTD. Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) The appellant is an EOU. It produces cut rose flowers for export. It is also entitled to selling part of the produce, as permitted by the Development Commissioner, in the domestic tariff area.

(2.) The Commissioner of Customs and Central Excise, Central Excise Commissionerate, Delhi -III has demanded a customs duty of about Rs. 88 lakhs from the appellant under Section 28 of the Customs Act, 1962 read with Notification No. 126/94, dated 3 -6 -1994. There is a demand for interest under Section 28AA of the Customs Act, 1962 and imposition of penalty of Rs. 17 lakhs under Section 114A of the Customs Act, 1962. The duty amount demanded is the customs duty payable on about Rs. 3 crores worth flowers cleared to the domestic area during the period 1997 -98 to 2001 -2002. The contention of the appellant in the present appeal is that the findings in the order are entirely contrary to the settled law on the issue. It is pointed out that goods produced in an EOU are subject to central excise duty as applicable and not customs duty. The learned Counsel for the appellants also has pointed out that flowers are not excisable under the central excise tariff. Given legal position, it is the submission of the learned Counsel for the appellants that the customs duty demand under the impugned order is not sustainable in law at all. The learned Consultant for the appellant has also pointed out that the impugned order is contrary to the clarification contained in Central Board of Excise and Customs Clarification dated 24th May, 2001, which is stated as under : -

(3.) We have perused the records and heard the learned SDR also. The learned SDR has referred to a Circular No. 78/95, dated 3 -7 -95 of the Central Board of Excise and Customs with regard to Notification No. 114/95 wherein it has been clarified that if the goods cleared from EOU to DTA is not excisable, then full Customs duty will be charged as if the said goods have been imported. Learned Consultant has replied to this by pointing out that this clarification is contrary to the decision of this Tribunal in the case of Vikram Ispat v. Commissioner of Central Excise, Mumbai -III [2000 (120) E.L.T. 800] wherein the Tribunal had held that clearance of the goods by a 100% EOU to the domestic tariff area are not imports under the Customs Act, and being goods manufactured in India, those goods are also liable to central excise duty. The learned SDK also pointed out that the impugned proceedings have not gone into the question as to whether any imported inputs had been used and, therefore, it is not clear whether customs duty on inputs is recoverable from the appellant.