Duty on cut flowers cleared into DTA without payment dismissed under Notification No. 126/94-Cus

The Tribunal dismissed the Revenue's appeals in a case involving Central Excise duty on cut flowers cleared into DTA without payment of duty. It was held that duty demands on cut flowers, considered non-excisable items produced in India, are not sustainable under Notification No. 126/94-Cus. The Tribunal clarified that duty should be demanded on imported inputs used in production, not on the cut flowers themselves. Therefore, the appeals lacked merit and were dismissed.

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Issues:
The issues involved in this case are whether Central Excise duty can be demanded on cut flowers cleared into Domestic Tariff Area (DTA) without payment of duty, and the interpretation of Notification No. 126/94-Cus regarding duty on articles manufactured by a 100% Export Oriented Unit (EOU) sold in India.

Central Excise Duty on Cut Flowers:
The case involves appeals filed by the Revenue against the Order-in-Original Appeal Nos. 63 to 68/2004 passed by the Commissioner of Central Excise (Appeals), Pune-I. The respondent, M/s. Pittie Agro Ventures Ltd., were alleged to have cleared cut flowers into DTA without payment of duty from July 1999 to March 2001. The lower appellate authority held that since cut flowers are not excisable goods, Central Excise duty cannot be demanded. The Revenue contended that duty should be demanded under Notification No. 126/94-Cus on non-excisable items. However, the Tribunal, citing a previous decision, held that duty demands on cut flowers are not sustainable as they are non-excisable items produced in India. Therefore, the appeals by the Revenue were dismissed.

Interpretation of Notification No. 126/94-Cus:
The Notification states that articles manufactured by a 100% EOU are to be sold in India on payment of Excise duty leviable under Section 3 of the Central Excise Act, 1944, or Customs duty equal to that leviable on inputs imported for production. In this case, duty was demanded on cut flowers produced in India, which are non-excisable items. The Tribunal clarified that if there is any violation, duty should be demanded on imported inputs used in production, not on the cut flowers themselves. Citing a previous decision, the Tribunal held that duty demands on non-excisable items produced in India are not sustainable under the Notification. Consequently, the appeals filed by the Revenue were dismissed for lacking merit.

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