Tribunal dismisses Revenue's appeal on excise duty demand for non-excisable goods by 100% EOU

The Tribunal upheld the Commissioner (Appeals)'s decision to annul the excise duty demand raised by the Revenue on non-excisable goods manufactured by a 100% EOU. The Tribunal ruled that demands under the Central Excise Act for non-excisable goods are unsustainable, dismissing the Revenue's appeals. The decision emphasized the inapplicability of cases related to demands under the Customs Act to the Central Excise Act context.

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Issues:
Demand of excise duty set aside by Commissioner (Appeals) - Applicability of Notification NO. 126/94 - Demand raised under Section 11A of Central Excise Act, 1944 - Manufacturer of non-excisable goods - Sustainability of demand under Central Excise Act.

Analysis:
The Revenue appealed against orders where excise duty demand was annulled by the Commissioner (Appeals). The core issue pertained to the demand concerning cut flowers grown in India by a 100% EOU and cleared for DTA sales. The Revenue contended that duty should be paid on duty-free procured inputs used in DTA sales clearance, citing Notification NO. 126/94. The demand was raised under Section 11A of the Central Excise Act, 1944. The Commissioner (Appeals), referencing a Larger Bench decision in Vikram Ispat vs. CCE Mumbai III, concluded that as the respondent manufactured non-excisable goods, the demand under the Central Excise Act was unsustainable. Consequently, the Revenue challenged this decision through appeals.

During the hearing, the Revenue's A.R. referenced cases like L.R. Brothers Indo Flora Ltd. vs. Commissioner of Customs Meerut and CCE Pune I vs. Horizon Flora India Ltd. to support their argument. However, upon examination, it was noted that these cases dealt with demands under the Customs Act, not the Central Excise Act as in the present matter. The Tribunal concurred with the Commissioner (Appeals) that when goods are not excisable, demands under the Central Excise Act cannot be upheld. Consequently, the appeals filed by the Revenue were deemed meritless and dismissed accordingly.

In conclusion, the Tribunal upheld the Commissioner (Appeals)'s decision, emphasizing the inapplicability of cases concerning demands under the Customs Act to the Central Excise Act scenario. The judgment reiterated that demands under the Central Excise Act for non-excisable goods are unsustainable, leading to the dismissal of the Revenue's appeals.

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