Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, Pune-I vs M/S. Vikram Greentech(I) Ltd on 8 April, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/455 to 459/05-MUM [Arising out of order-in-appeal No.P-I/74 to 78/2004 dated 12.7.04 passed by the Commissioner(Appeals) of Central Excise, Pune-I] For approval and signature: Honble Mr. P.K. Jain, Member(Technical) Honble Mr Ramesh Nair, Member(Judicial) =======================================================
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Commissioner of Central Excise, Pune-I
:
Appellants
VS
M/s. Vikram Greentech(I) Ltd.
:
Respondent
Appearance
Shri. N.N. Prabhudesai, Supertintendent(A.R.) for the Appellants
Shri. V.M. Doiphode, Advocate for the Respondent
CORAM:
Honble Mr. P.K. Jain, Member (Technical)
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 8/4/2015
Date of decision /2015
ORDER NO.
Per : Ramesh Nair
These five appeals by the revenue, are directed against the Order-in-Appeal No.P-I/74 to 78/2004 dated 12.7.04 passed by the Commissioner(Appeals) of Central Excise, Pune-I wherein the Ld. Commissioner set aside the Orders-in-Original and allowed the appeals filed by the present Respondents.
2. The fact of the case is that the Respondent M/s Vikram Greentech (India) Ltd., Pune is an 100% EOU and engaged in growing fresh flowers and clearing the fresh Cut Flowers in DTA. Periodical show cause notices were issued wherein it was alleged that the Respondent have cleared the product fresh cut flowers in domestic tariff area and not paid the appropriate duty leviable thereon; that the Respondent have contravened the para 9.9 of Exim Policy 97-02 read with para 102 of Exim Policy 92-97 in as much as thety have not properly followed the guidelines for the sale of goods in Domestic Tariff Area (DTA) by an E.O.U./ E.P.Z. unit as provided in the Appendix 42 of Hand-Book Procedure 97-02 and provisions contained in para 3 of Customs Notification No. 126/94-Cus dated 03.06.94; that the permission from the Development Commissioner of the EPZ for DTA sale has not been produced by the assessee which contravened the provisions of para 9.9 of the Exim Policy 97-02, read with para 9.22 & 9.23, and the gredelines of the Appendix-42 of the Hand Book Procedure 97-02; that the Respondent have not filed the RT-13 and also have not paid appropriate duty towards sale of the cut flowers in DTA during the period April, 1998 to December, 1999 & March,2000 to June,2000. In the adjudication, the Adjudicating Authority vide Orders-in-Original Nos. 49/01 dated 01.08.01, 98/01 dt. 26.11.01, 44/00 dt. 10.03.00, 110/03 dt.27.11.03 and 59/01 dt. 19.09.01 confirmed the duty demands in terms of Notification No.126/94-Cus dated 03.06.94 and also imposed penalty under Rule 173Q. Aggrieved by the aforesaid Orders-in-Original the Respondent preferred appeals before the Commissioner (Appeals) who vide the impugned order dated 02.07.04 set aside the adjudication orders and allowed the appeals of the Respondent. Being aggrieved, the Revenue is before us.
3. Shri N. N. Prabhudesai, Ld. Superintendent (AR) appearing on behalf of Appellant Revenue submits that the Adjudicating Authority rightly confirmed the demand in terms of Notification No.126/94-Cus. It is his submission that where duty free imported goods are used in finished articles, which have not been exported, according to para (3) of Notification No.126/94-Cus dated 03.06.94 which clearly sets out that where the articles manufactured by 100% EOU are not excisable, are to be sold in India on payment of Customs Duty on the said goods used for the purpose of production, manufacture or packaging of such articles in an amount equal to the customs duty leviable on such articles as if imported as such. Under this legal position, the respondent is liable to pay custom duty on the Cut Flowers sold in DTA. The Ld. Commissioner (Appeals), therefore, erred in holding that duty can not be demanded in respect of Cut Flowers grown by 100% EOU and cleared for DTA sales and also the product being non-excisable the demand of Central Excise duty is not sustainable. In support of his submissions, Ld. AR placed reliance on the following judgments:
1. CCE, Pune Vs. Horizon Flora India Ltd.
2013-TIOL-203-CESTAT-Mum
2. L.R.Brothers Indo Flora Ltd. Vs. CC, Meerut.
2009 (235) ELT324 (Tri.Del) Ld. AR submits that in the above judgments demand of custom duty in terms of Notification No.126/94-Cus has been sustained. Therefore, present case on identical facts and issue, the custom duty is chargeable from the Respondents. He prays, the impugned order be set aside and Original orders be restored.
4. On the other hand Shri V.M. Doiphode, Ld. Counsel for the Respondent submits that in the present case the duty was sought to be demanded in terms of Notification No.126/94-Cus. There is no dispute that the final product of the Respondent i.e. Fresh Cut Flowers is not excisable as the same does not find any entry in the Central Excise Tariff. In terms of aforesaid notification, if the final product of the 100% EOU is other than excisable, in such case duty is required to be paid on the goods imported and used for manufacture/production/packaging of the final product of 100% EOU unit. In the present case the duty sought to be demanded is not on the imported inputs but on the non excisable final products i.e. Cut Flowers. He submits that Notification No.126/94-Cus does not empowers the department to demand duty on non excisable final products but it only provides that in case of final product being non excisable, custom duty equal to amount of duty leviable on the inputs can only be demanded. Moreover, this is not the case of the revenue that the Respondent have imported any input or packaging material for use in the growing/producing/packaging the final product i.e. Cut Flowers. Therefore, in terms of the condition of the said notification, no duty is leviable on the cut flowers cleared in DTA. He countering the judgments relied upon by the Ld. AR, submits that both the above judgments is on the issue of demand of custom duty on the imported goods used in the non excisable goods cleared in DTA, whereas in the present case the demand of duty is on the non excisable Cut Flowers produced and cleared by the Respondent in DTA. Therefore being the different facts, the judgments are not applicable as not relevant. Ld. Counsel placed reliance on the following judgments:
1. Commissioner of C. Ex., Pune Vs Abbound Bio-Agri Technologies Ltd.[2014 (307) E.L.T. 305 (Tri.-Mum)
2. Commissioner of Central Excise, Pune-I Vs. Soex Flora P. Ltd.[2014(300) ELT 256 (Tri.-Mum)
3. Commissioner of Central Excise, Pune-I Vs. Neha International Ltd. [2015 (315) ELT 89 (Tri.-Mum)
5. We have carefully considered the submissions made by both sides and perused the records.
6. The issue to be decided by us is that, whether custom duty is chargeable on fresh cut flowers grown and cleared by the appellant in DTA in terms of Notification No. 126/94-Cus dated 3/6/1994 or otherwise. Since the whole issue revolving the Notification No. 126/94-Cus, it is necessary to first go through the said notification, the relevant paras of the Notification is reproduced below:
Notwithstanding anything contained in this notification, the exemption contained herein shall also apply to the said goods which on importation into India are used for the purposes of production, manufacture or packaging of articles and such articles (including rejects, waste and scrap material arising in the course of production, manufacture or packaging of such articles) even if not exported out of India are allowed to be sold in India under and in accordance with the Export-Import Policy and in such quantity and subject to such other limitations and conditions as may be specified in this behalf by the Development Commissioner, on payment of duty of excise leviable thereon under section 3 of the Central Excises and Salt Act, 1944 (1 of 1944) or where such articles (including rejects, waste and scrap material) are not excisable, on payment customs duty on the said goods used for the purpose of production, manufacture or packaging of such articles in an amount equal to the custom duty leviable on such articles as if imported as such.
As per the above condition of the Notification, in case of excisable goods, exemption is available on imported goods which are used for purpose of production, manufacture or packaging of articles and such articles even if not exported out of India are allowed to be sold in India on payment of duty of excise leviable thereon under Section 3 of the Central Excise and Salt Act,1944. However if such articles are not excisable, then custom duty on the imported goods used for the purpose of production manufacture or packaging of such articles, an amount equal to the custom duty leviable on such articles as if imported as such, should be paid. As per this provisions a clear distinction between excisable goods and non excisable goods were made. When excisable goods are manufactured then the excise duty in terms of Section 3 of Central Excise and Salt Act, 1944 are required to be paid which is otherwise equal to the custom duty leviable on such article. In case of non-excisable goods, no excise duty or custom duty on such non-excisable goods are required to be paid. Only custom duty equal to amount leviable on imported goods used for production, manufacture or packaging of such article are required to be paid. In the present case the final product is Cut Flowers which is sold in DTA market. The said Cut Flowers are not excisable, firstly there is no question of any payment of excise duty or custom duty on cut Flowers. If at all any duty liability is there it should be on the imported goods which is used for production, manufacture or packaging of cut flowers. In the instant case, it is not case of Revenue that the appellant have used any imported material for growing or packaging of cut flowers. Therefore there is no question of any demand of custom duty. In any case, the demand was confirmed by the original adjudicating authority in terms of Notification No. 126/94-Cus on the cut flowers as discussed above. Cut flower being non-excisable goods, neither any excise duty nor any custom duty is require to be paid.
6.2 This issue has been considered in number of judgments as cited by the rivals. Relevant paras of the cited judgments are reproduced below:
Abbound Bio-Agri Technologies Ltd.
4.?We have carefully considered the submissions made by both the sides. Notification 126/94 grants exemption to inputs imported for the production, manufacture or packaging of articles for export purposes. One of the conditions stipulated for availing the benefit of exemption is that if the articles which are manufactured/produced are not excisable and are not exported, then customs duty can be demanded on the imported inputs used for the purpose of production and manufacture of such articles in an amount equal to the customs duty leviable on such articles as if they are imported as such. In other words, the duty demand is on the imported inputs and not on the articles which have been produced and such duty is demandable at the time of clearance of the non-excisable articles into DTA. Notification does not permit demand of duty on the articles manufactured/produced in India when cleared into DTA. In the present case, the show cause notice proposes to demand excise duty on cut-flowers which are not excisable. Therefore, the provisions of Notification 126/94 has no application.
4.1?This Tribunal in the case of Cosco Blossoms Pvt. Ltd. v. Commissioner of Customs [2004 (164) E.L.T. 423] dealt with a similar situation and held that, goods produced in an EoU cannot be treated as imported goods and only excise duty under Section 3 of the Central Excise Act is payable and customs duty is not demandable. The Tribunal further held that, customs duty can be demanded on the imported inputs, if any, used in the production of such goods. In the case before us, there is no demand of duty on the imported inputs in terms of Notification 126/94. Therefore, the respondent is right in contending that the demands are not sustainable.
5.?In view of the above factual and legal position, we find no merits in the appeals filed by the Revenue and accordingly the same are dismissed.
Soex Flora P. Ltd.
3.?The issue involved is relating to the demand of issue of cut flowers grown in India by 100% EOU and cleared for DTA sales. The Revenue was of the view that in the light of Notification No. 126/94, dated 3-6-1994, the respondents are liable to pay duty on inputs procured duty-free which were used in clearance of DTA sales. Further, in the show cause notice, demand has been raised under Section 11A of Central Excise Act, 1944. The learned Commissioner (Appeals) relying on Larger Bench decision in the case of Vikram Ispat v. CCE, Mumbai-III - 2000 (120) E.L.T. 800 (Tri.-LB) held that as the respondent is manufacturer of non-excisable goods, demand under Central Excise Act is not sustainable. Being aggrieved by the same, the Revenue is in appeals.
4.?Heard both sides.
5.?The learned A.R. appearing for the Revenue relied on the decision in the case of L.R. Brothers Indo Flora Ltd. v. Commissioner of Customs, Meerut - 2008-TIOL-1649-CESTAT-DEL = 2009 (235) E.L.T. 324 (Tri.-Del.) and CCE, Pune-I v. Horizon Flora India Ltd. - 2013-TIOL-203-CESTAT-MUM in support of his contention.
6.?Considered the submissions made by both the sides.
7.?We find that the case law relied on by the learned AR deals with the demand under the Customs Act. Admittedly, in these matters duty has been demanded under the Central Excise Act. Therefore, the case law relied on by the learned AR are not relevant to the facts of these cases. We do agree with the observation of the learned Commissioner (Appeals) that when the goods are not excisable, demand under the Central Excise Act is not sustainable. Therefore, we do not find any merits in the appeals filed by the Revenue. Accordingly, the same are dismissed In another case of this Tribunal, similar judgment was passed which is extracted below in case of Neha International Ltd.(supra)
2.?The facts are that the respondent cleared Cut Flowers grown by their 100% EOU, into Domestic Tariff Area (DTA). The case of the respondent was that they have not availed any concession on indigenous inputs/raw materials and also did not use any imported inputs/raw materials. The Commissioner (Appeals) held that cut flowers are non-excisable and neither Customs duty nor Central Excise duty is demandable on the cut flowers cleared into DTA. The Commissioner (Appeals) relied on Vikram Ispat v. CCE, Mumbai-III - 2000 (120) E.L.T. 800 (Tri.-LB) in which it was held that Customs duty is not leviable on DTA sales and only Central Excise duty can be charged under Section 3 of the Central Excise Act, 1944 in respect of the DTA clearances by 100% EOUs. He also relied similarly on Cosco Blossoms Pvt. Ltd. v. Commissioner of Customs, Delhi - 2004 (164) E.L.T. 423 (Tri.-Del.).
3.?The learned AR relied on the Grounds of Appeal filed by the Revenue. He referred to para 3 of Notification No. 126/94-Cus., dated 3-6-1994 which states that -
3.?Notwithstanding anything contained in this notification, the exemption contained herein shall also apply to -
(a)?the said goods which on importation into India are used for the purposes of production, manufacture or packaging of articles and such articles (including rejects, waste and scrap material arising in the course of production, manufacture or packaging of such articles) even if not exported out of India are allowed to be sold in India under and in accordance with the Export-Import Policy and in such quantity and subject to such other limitations and conditions as may be specified in this behalf by the Development Commissioner, on payment of duty of excise leviable thereon under Section 3 of the Central Excises and Salt Act, 1944 (1 of 1944) or where such articles (including rejects, waste and scrap material) are not excisable, customs duty equal in amount to that leviable on inputs obtained under this notification and used for the purpose of production, manufacture or packaging of such articles, which would have been paid, but for the exemption under this notification, shall be payable at the time of clearance of such articles. 3.1?Revenue has also appealed on the ground that in the case of Cosco Blossoms Pvt. Ltd. (supra) this Tribunal observed that however we make it clear that the revenue authorities will be at liberty to demand duty on the imported inputs if any used in the production of the cut flowers in question.
4.?None appeared for the respondent. Heard the submissions of the learned AR for the Revenue. We have carefully gone through the case details.
5.?We find that in this case what is demanded is the Central Excise duty on the DTA clearances. The relevant part of the statute i.e. Section 3 of the Central Excise Act provides that the duties of excise which shall be levied and collected on any excisable goods manufactured by a 100% EOU shall be an amount equal to aggregate of the duties of Customs which would be leviable on like goods produced or manufactured outside India and if imported into India. Therefore, the law is very clear. What is charged on domestic clearances by 100% EOU is duty of excise. In this case the goods namely cut flowers are non-excisable. The judgements cited by the Commissioner support this obvious interpretation of Section 3. Revenues appeals on the ground that the Notification provides otherwise is not acceptable because a Notification cannot override the basic provision of law for charging duty. Revenues reference to Cosco Blossoms Pvt. Ltd. (supra) to justify the duty can be demanded on imported inputs is totally mis-placed and uncalled for because what was demanded in the show cause notice is Central Excise duty.
6.?In view of the above, Revenues appeals are dismissed. Cross Objections filed by the respondent are also disposed of in the above terms.
.
From above judgments it can be seen that very same issue involved in the present case has been elaborately dealt and this Tribunal consistently held that the cut Flowers cleared by 100% EOU in DTA does not attract any duty.
6.3 As regard the judgment relied upon by the Revenue, going through those judgments, we find that in case of Horizon Flora India Ltd (supra), the same has been distinguished in the case of Soex Flora P. Ltd (supra). As regard the judgment of L.R.Brothers Indo Flora Ltd(supra), in the said judgment, it has been decided that custom duty chargeable on input gone into production of cut Flowers and held that custom duty leviable on import of cut Flowers correctly chargeable. In the present case it is not the case of demand of custom duty on the import of cut Flowers whereas it is a case of demand of duty on Cut Flowers grown/produced domestically and cleared in DTA. The fact of L.R.Brothers Indo Flora Ltd case and the present case are different. Therefore the ratio of LR brothers case is not applicable in the present case. It is also seen that the LR brothers case has been distinguished in the case of Soex Flora P. Ltd and also the said judgment referred in Abbound Bio-Agri Technologies Ltd (supra) case.
6.4 In view of the above legal position, we are of the considered view that demand of duty on the Cut Flowers grown /produced in India and cleared in DTA is not chargeable, therefore the impugned order is sustained. Revenues appeals are dismissed.
(Order pronounced in court on_______________) P.K. Jain Member (Technical) Ramesh Nair Member (Judicial) sk 14 E/455 to 459/05-MUM