EURO COTSPIN LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) M/s. Euro Cotspin Ltd. and others have filed these three appeals being aggrieved with Order -in -Original No. 5/2002, dated 27 -2 -2002 passed by the Commissioner confirming the demand of Central Excise duty and imposing penalties in respect of sales made to Domestic Tariff Area.

(2.) Shri Balbir Singh, learned Advocate, submitted that the Appellants company is a 100% Export Oriented Unit (EOU), manufacturing various types of yarn; that during the relevant period, they were permitted to clear their final products in Domestic Tariff Area (DTA) up to 50% of the value of exports made in previous year; that besides this they were also permitted to clear 5% of waste, scrap and rejects in DTA over and above limit of 50% of the final product; that as per Appendix 42 of the Export Import Policy, 1997 -2002, 100% Export Oriented Units are at liberty to adopt quarterly/half yearly/yearly basis for clearing the goods in DTA; that they were working under quarterly basis scheme and clearing their final goods in DTA on the basis of permission obtained from Development Commissioner every quarter; that the Commissioner has confirmed the demand of duty and imposed penalties on the ground that the benefit of deemed export for the purpose of arriving at the additional DTA clearance over and above the permissible limit of 50% of FOB value of previous year export is not available to them; that clearance were restricted to prescribed limit of 50% of the FOB value of previous years' physical exports and the value of rejects and waste cleared under the DTA will be taken into consideration for the limit of 50% of the FOB value of export which can be cleared in DTA.

(3.) Learned Advocate, further, submitted that they have made supplies in DTA under Para 9.9(b) of the EXIM Policy on the basis of permission granted by the Development Commissioner; that this permission to remove the goods under DTA have not been reviewed by the Development Commissioner; that accordingly duty liability by disputing the permission given by the Development Commissioner cannot be sustained. Reliance has been placed on the basis of the case of Ginni International Ltd. v. Commissioner of Central Excise, Jaipur, 2002 (139) E.L.T. 172 (Tri.) and Virlon Textile Mills v. Commissioner of Central Excise, Mumbai -III [2002 (139) E.L.T. 371 (Tri.)]. He also mentioned that as the Appellants were availing the DTA facility on quarterly basis their export performance has to be seen on quarterly basis and therefore, duty cannot be demanded merely on the basis that DTA sales in 1999 -2000 were more than 50% of FOB value of exports in the previous year; that Para 9.9(b) of the Policy provides for DTA sales upto 50% of the FOB value of the Export and it does not anywhere specify that DTA entitlement is to the extent of 50% of the FOB value of exports made in the previous year; that accordingly, the manner of calculation of excess DTA clearance is wrong. Finally, he submitted that Para 9.9(a) of the Policy specifically provides that sales of rejects above 5% should be accounted towards DTA sales entitlement under Para 9.9(b); that this clearly goes to show that rejects may be sold in the Domestic Tariff Area up to 5% separately; that similarly Para 9.30(a) of Handbook of Procedures provides that waste and scrap up to 5% of FOB value of export may be sold in DTA. He also relied upon the decision in the case of Nahar Industrial Enterprises v. CCE, Chandigarh -I [2003 (154) E.L.T. 284 (Tri.)].