DTA clearances by a 100% EOU: customs-linked duty computation under the exemption notification applied prospectively only.

Cut flowers manufactured by a 100% Export Oriented Unit and cleared into the Domestic Tariff Area were treated as liable to duty under the relevant exemption notification. The notification was read as containing a specific machinery for DTA clearances of non-excisable articles, requiring customs duty to be paid in an amount equal to the duty leviable as if the goods were imported, which operated by reference to the inputs used in production. An amendment shifting the computation to an actual-basis method was held to be prospective and not applicable to the disputed period, and the contrary interpretation was rejected because it would make part of the clause redundant.

---

---

Issues: Whether cut flowers manufactured by a 100% Export Oriented Unit and cleared to the Domestic Tariff Area were liable to duty, and whether the duty was payable with reference to the customs duty on the inputs used in their production under the exemption notification.

Analysis: The notification governing the imports contained a specific mechanism for DTA clearances of articles that were not excisable. For the relevant period, the wording required payment of customs duty in an amount equal to the duty leviable on such articles as if imported, which operated as a machinery provision for determining duty on the inputs used in production. The later amendment to the notification, which shifted computation to actual basis, was held to be prospective and not applicable to the period in dispute. The earlier Tribunal view relied on by the respondent did not give effect to the full wording of the notification, and the interpretation urged by the respondent would render part of the clause redundant.

Conclusion: The cut flowers cleared to the Domestic Tariff Area were liable to duty under the notification, and the Revenue's appeals succeeded.

---