COMMISSIONER OF CENTRAL EXCISE Vs. TRANSCHEM LTD

JUDGEMENT

(1.) HEARD both sides. The Revenue is in appeal. The issue involved in these appeals is common. Therefore, they are taken up together for disposal. Briefly stated facts of the case are that M/s. Transchem Ltd. (respondent) is a 100 percent. EOU and is producing fresh mushrooms and manufacturing canned mushrooms falling under Chapters 7 and 20 of the Central Excise Tariff Act, 1985. The respondent claimed nil Central excise duty for fresh mushrooms in terms of Notification No. , dated March 1, 1997. In the case of Appeal No. E/2809/2004, show -cause notices were issued for the period March, 1997 to July, 1997, August, 1997 to January, 1998, February, 1998 to June, 1998 and August, 1998 to December, 1998 on the ground that the respondent did not follow the guidelines prescribed in Appendix XXXII of the Handbook of Procedures inasmuch as they have not produced the requisite certificate from their CHA and on the ground that the respondent did not produce the permission from the Development Commissioner of ETZ for DTA sale and on the ground that they have not fulfilled the conditions of Notification No. inasmuch as their finished goods are not produced or manufactured in India. In the case of the show -cause notice for the period August, 1998 to December, 1998, they did not pay duty as per Notification No. as amended by Notification No. 13/1998, dated June 2, 1998. The lower authority vide Order -in -Original F. No. V(100% EOU) 15 -11/Adj/1999, dated June, 1999, dropped the proceedings initiated by the aforesaid show -cause notices. The Department reviewed the said order. The learned Commissioner (Appeals) vide Order -in -Appeal No. P -l/40/2004, dated May 31, 2004 upheld the lower adjudicating authority's order. In the case of Appeal Nos. E/2806 and 2808/2004, show -cause notices were issued for the period from January, 2000 to February, 2000 and January, 1999 to December, 1999 on the similar grounds. The lower adjudicating authority vide Orders -in -Original No. V(100% EOU) 15 -09/Adj/2001, dated August 1, 2001 and No. V(100% EOU) 15 -141/Adj/1999, dated January 31, 2001 confirmed the proposal in the show cause notices. The respondent challenged the same before the Commissioner (Appeals) who set aside the lower adjudicating authority's orders. Hence the Revenue is in appeal.

(2.) THE contention of the learned authorised representative appearing for the Revenue is that the canned mushrooms have been sold by the respondent in the domestic market. At the time of import/procurement without payment of duty, the respondent has to satisfy the condition that such materials/components are used for specific purpose, i.e., for export of the finished goods. The contention is that where such imported/procured duty -free goods are used in the finished goods which have not been exported, the proportionate duty on such materials/components is to be paid by the respondent and as per Notification No. 13/1998 -CE, dated June 2, 1998, Central excise duty is to be recovered on the clearances made in DTA on the appropriate value as prescribed in the EXIM Policy. Notification No. 13/1998 -CE specifies the effective rate of Central excise duty under the provisions of the Customs Act. The contention is that the Commissioner (Appeals) has upheld the order -in -original by applying case law which were irrelevant and the Commissioner (Appeals), while relying upon the decision of the Tribunal in the case of Cosco Blossoms P. Ltd. : [2004] 164 ELT 423 (Trib. -Delhi), overlooked the observations of the Tribunal that the Revenue is not barred from recovering duty on goods used for the manufacture of such articles.

(3.) The respondent claimed the benefit of Notification No. , dated March 1, 1997, which is reproduced hereunder: