UNIWORTH TEXTILES LTD. AND ORS. Vs. CCE

JUDGEMENT

(1.) M/s Uniworth Textiles Ltd., B -129, MIDC Area, Buti Bori, Distt. Nagpur (hereinafter referred to as UTL) are a 100% EOU who started their operations sometime in the year 1994 on the basis of an LOP No. 23/94/EOU/573/93 dated 17/01/94 issued by the Ministry of Commerce. UTL had been promoted by M/s Uniworth International Ltd., Uniworth Centre, 70A, Shakespeare Sarani, Kolkata - 700 017 (hereinafter referred to as UIL). While Shri Narendra Kumar is the Chairman of UTL, Shri B.K. Dalmia is President of UTL as well as Director of UIL and Shri S.K. Dalmia is the President of UIL as well as CEO of UTL. Shri Samir Ghosh is another Director of UTL.

(2.) UTL manufacture all wool fabrics, wool silk and poly wool fabrics of different varieties for export. During the period of dispute, a 100% EOU, as per the then exim policy, was entitled to export 25% of the FOB value of its exports into DTA with the approval of the Development Commissioner and besides this, 5% of the FOB value of the exports could be cleared as "rejects" into DTA. As per the provisions of the proviso to Section 3(1) of Central Excise Act, 1944, as amended with retrospective effect w.e.f. 11/05/82 by Section 92 of the Finance Act, 2000, the clearances of goods manufactured by a 100% EOU or a unit in Export Processing Zone (EPZ) into DTA attract central excise duty equal to the aggregate of the duties of Customs leviable under the Customs Act, 1962 or any other law for the time being in force, on like goods manufactured outside India if imported into India, and where the said duties are ad -valorem, the value of such excisable goods has to be determined in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1965. However, if the DTA clearances are as per the provisions of the EXIM policy, i.e. DTA clearances of prime quality goods within quota of 25% of the FOB value of exports and of 'rejects' within 5% of the FOB value of exports have been made with the approval of the Development Commissioner, such DTA clearances attract the concessional rate of duty under Notification No. 2/95 -CE, which is 50% of the rate prescribed under the proviso to Section 3(1) of the Central Excise Act.

(3.) We have carefully considered the submissions from both the sides and perused the records. The period of dispute in this case is from August 1997 to March 2002 and there is no dispute about the fact that during this period the DTA clearances had been made under the provisions of the exim policy relating to the clearances of "rejects" of value upto 5% of the FOB value of exports. The main point of dispute in this case is as to whether these clearances were of genuinely rejected goods or were of prime quality goods.