Customs, Excise and Gold Tribunal - Mumbai
Saheli Synthetics Pvt. Ltd., R.R. ... vs Commissioner Of Central Excise And ... on 5 September, 2001
Equivalent citations: 2002(139)ELT594(TRI-MUMBAI)
JUDGMENT
Gowri Shankar, Member (Technical)
1. Saheli Synthetics (Appeal C/398/01) is a 100% export oriented unit at Surat. It is engaged in printing and dyeing of fabrics which it imports, predominantly for the purpose of export. It also sells part of the production in the domestic tariff area. The notice issued to it demanded duty under Section 28 of the Customs Act, 1962 on the ground that it had removed quantities of such processed fabrics to the domestic tariff area without payment of duty and on the further ground that it had short paid customs on some other quantities which it sold. Penalty under Section 112 of the Act was proposed on it and on R.R. Agarwal, its director for its contravention. Penalty under Section 112 was also proposed on Gajanand Fabrics, Kamdhenu Textiles and Shalimar Fabrics, for having purchased such goods.
2. The contention of the common counsel for the appellants is that no duty under the Customs Act, 1962 could be demanded on these goods which the appellant manufactures in its factory in India and sells in the domestic tariff area and therefore no penalty can be imposed on the appellant, or anyone else for this contravention. We are not able to understand the rationale for demanding duty on the goods under consideration under Section 28 of the Customs Act 1962. The show cause notice does not proposed to demand customs duty on the fabrics the appellant imported on any ground such as that they were not utilised in the manufacture of exported goods. Such a demand could be justified where goods are manufactured by a 100% export oriented unit in a factory in a free trade zone using imported raw materials or components are cleaned to a buyer in the domestic tariff area they are not imported. The 100% export oriented unit and a free trade zone are located in India. What is correctly payable is excise duty. The proviso under sub-section (1) of Section 3 of the Central Excise Act, 1944 provides that the duties of excise payable on such goods manufactured in a free trade zone or by export oriented unit shall be equal to the aggregate of the customs duties leviable under Section 12 of the Customs Act, 1962 on like goods imported into India. It also provides that where such duties are ad valorem the value shall be determined in accordance with the provision of the Customs Act, 1962 and Customs Tariff Act, 1974. The measure, therefore, in the statute for the calculation of duty is the customs duty payable on such goods if they were imported. The levy and collection of duty is covered to be government by the provisions of enactments relating to Central Excise. The provisions of the Customs Act, 1962 and Customs Tariff Act, will have no application in this regard.
3. On this point, without going to the merits of the issue, we hold that the show cause notice demanding duty and proposing penalty under the Customs Act is not maintainable, set aside the order confirming this notice and allow this appeal. We however make it clear that the department is at liberty to proceed to recover excise duty, if any, payable on the goods and initiate acts for contravention of the Central Excise Act and the rules thereunder in accordance with law.