Customs duty on EOU DTA clearances of cut-flowers was based on imported inputs, not deemed finished-goods value.

For DTA clearances of non-excisable cut-flowers by a 100% EOU before 18-05-2001, customs duty under para 3(a) of Notification No. 126/94-Cus. was computed on the imported inputs used in manufacture, not on the finished goods as if imported. The later amendment by Notification No. 56/2001-Cus. introduced a different computation basis but operated only prospectively from 18-05-2001. Reading the unamended provision as a whole, liability remained linked to the inputs used, and the contrary construction would make part of the language redundant. Duty was therefore correctly charged on that basis.

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Issues: Whether, for DTA clearances of non-excisable cut-flowers made by a 100% EOU during the period prior to 18-05-2001, customs duty was chargeable only on the imported inputs used in manufacture or whether it could be computed with reference to the customs duty leviable on the finished cut-flowers as if imported.

Analysis: Under para 3(a) of Notification No. 126/94-Cus., as it stood during the relevant period, non-excisable articles cleared into the DTA attracted customs duty on the inputs used in their production. The amendment brought in by Notification No. 56/2001-Cus. substituted a different basis of computation, but that amendment operated only prospectively from 18-05-2001. Reading the unamended provision, the duty mechanism for the relevant period linked liability to the inputs used and not to the finished goods as such. The construction urged by the appellant would render part of the unamended language redundant, which was impermissible.

Conclusion: Customs duty was correctly charged on the DTA clearances in accordance with the unamended notification, and the challenge failed.

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