COMMISSIONER OF CENTRAL Vs. GOLDEN CARPETS LTD.

JUDGEMENT

(1.) REVENUE has filed this appeal against Order -in -appeal 87/04 dated 15th October 2004 passed by the Commissioner of Customs and Central Excise Hyderabad. The facts of the case are as follows:

(2.) THE respondents M/s Golden Carpets Ltd., were a 100% EOU licenced for manufacture and export of Persian carpets under the 100% EOU Scheme. They were granted advanced DTA permission on 15.6.1998 for a quantity of 40,000 Sq meter for a value not exceeding Rs. 113.6 lakhs which shall be adjusted against the DTA entitlements to be earned in the subsequent years within the total period of 5 years as specified in the letter of permission (LOP). The respondents sought for pre -mature de bonding of the EOU into EPCG Scheme. The conversion to EPCG scheme by de bonding was permitted by the Development Commissioner on 7.6.2002. Therefore, the respondents paid duties on raw material as well as capital goods under Notification 49/2000 - Cus by paying 5% basic customs duty in accordance with EPCG licence dated 26.2.2002. They had cleared a quantity of 6,764.11 Sq meters as advance DTA sales by availing duty concession under Central Excise Notification 2./95 dated 4.1.95. under the norms specified in para 9.9 (b) of the Exim Policy 1997 -2002. Revenue proceeded against the respondents for recovery of differential duty on the advance DTA clearances on the ground that they had failed to achieve the NFEP (value addition) The lower authority demanded an amount of Rs. 7, 30,491/ - being the duty short -paid on the advance DTA sales. Interest has also been demanded. The lower authority in the findings of his order dated 6th November 2002 has relied on the clarification of the Development Commissioner in his letter 20.9.2002 to the effect that during the operational period as EOU from 15.2.99 to 31.5.2002, the respondents had achieved negative NFEP of 86.69% against the prescribed NFEP and had fulfilled export obligation of 10.35% only with a direction to the Central Excise Department to collect full duties on advance DTA sales of the carpets as per Central Excise Law as the unit had not achieved the positive NFEP. Aggrieved over the Order of the lower authority, the respondents approached the Commissioner (Appeals) who passed the impugned order dated 15.10.2004. In the impugned order, the Commissioner (Appeals) has very elaborately dealt with the various issues arising out of the Order of the lower authority and allowed the appeal of the respondents with consequential relief. The main ground of appeal of the Revenue is that the impugned order of the Commissioner (Appeal) allowing the assessee's appeal with consequential relief is not correct in law in view of the clarification given by the Development Commissioner in his letter dated 20.9.2002.

(3.) SHRI K.S. Reddy learned SDR appeared for the Revenue and none appeared for the respondents.