2002 (9) TMI 205 - AT - Central Excise

EOUs Eligible for DTA Clearance Based on Deemed Exports - Tribunal Upholds Development Commissioner's Authority

The Tribunal held that 100% Export Oriented Units (EOUs) can be eligible for clearance in the Domestic Tariff Area (DTA) based on deemed exports, not just ... Deemed export - Permission under Paragraph 9.9 of the EXIM Policy - Authority of Development Commissioner to determine value of DTA sale - Non-interference by Central Excise with permissions granted by an external competent authorityDeemed export - Permission under Paragraph 9.9 of the EXIM Policy - Authority of Development Commissioner to determine value of DTA sale - Non-interference by Central Excise with permissions granted by an external competent authority - Whether deemed exports may be taken into account for computing the value of DTA clearance authorised by the Development Commissioner and whether the Revenue can disregard that authorised value and demand excise duty. - HELD THAT: - The Tribunal held that where a 100% EOU obtains permission from the Development Commissioner to sell goods in the DTA under Paragraph 9.9 of the EXIM Policy, the Revenue cannot go beyond that permission and dispute the authorised value of clearance by attempting to treat only physical (actual) exports as relevant. The Development Commissioner, as the competent authority under the EXIM Policy and Handbook of Procedures, determines the extent (value) of DTA sale and issues goods removal authorisation; if the Development Commissioner includes supplies such as deemed exports when fixing the authorised value, Central Excise authorities are not entitled to re-examine that valuation and disallow clearances on the ground that only FOB value of physical exports should have been taken into account. The Tribunal relied on earlier decisions applying the consistent premise that an authority outside the Central Excise Department, when vested with power to grant permissions or certificates, must have its determinations respected by the Revenue, and any objection should be taken up with that competent authority rather than by substituting departmental view. Applying that ratio, the impugned demands were set aside insofar as they sought to disregard deemed exports and dispute the Development Commissioner's authorised DTA clearance value.The Tribunal set aside the impugned orders and allowed the appeals, holding that deemed exports could be taken into account for the authorised value of DTA clearance and that the Revenue could not disregard the Development Commissioner's permission.Final Conclusion: Appeals allowed; demands set aside on the ground that the Development Commissioner's authorisation under Paragraph 9.9 of the EXIM Policy, which included deemed exports in fixing the value of DTA sale, could not be re-opened by the Central Excise authorities to impose excise duty. Issues involved: Interpretation of whether only actual or physical exports should be considered for clearance in Domestic Tariff Area (DTA) by 100% Export Oriented Units (EOUs) under relevant notifications.Summary:The case involved an appeal by a 100% EOU engaged in manufacturing crimped/texturised yarn, seeking clearance in the Domestic Tariff Area (DTA) under specific notifications. The dispute arose when the department questioned the eligibility of the unit for DTA clearance due to alleged lack of physical exports. Three show cause notices were issued proposing duty recovery and penalties. The main issue was whether only actual exports or even deemed exports could be considered for DTA clearance.The Tribunal, considering the case of Ginni International Ltd. v. CCE, Jaipur, held that once an EOU has permission to sell goods in DTA as per Exim Policy, the government cannot dispute the value of clearance approved by the competent authority, in this case, the Development Commissioner. The Tribunal emphasized that the Revenue cannot challenge the clearance value authorized by the Development Commissioner, and the duty demand cannot be solely based on FOB value of physical exports. The Tribunal cited previous cases to support this view, emphasizing the authority of the Development Commissioner in permitting DTA sales. The Tribunal concluded that the Revenue cannot question the value of clearance allowed by the competent authority and set aside the duty demand, allowing the appeals.The Tribunal's decision was influenced by previous cases such as Cadilac Textiles Ltd. v. CCE & C, Surat and Virlon Textile Mills v. CCE, Mumbai-III, where similar views were upheld. The Tribunal, based on these precedents, set aside the duty demand and allowed the appeals, emphasizing the authority of the Development Commissioner in permitting DTA sales for 100% EOUs.