https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=52369 https://www.taxtmi.com/caselaws?id=52369 Demand - EOU - excise duty on different goods - 100% export-oriented - eligibility to the exemption contained in Notification 2/95 - Penalty - HELD THAT:- As to the aspect peculiar to the case of Opal Fabrics the contention that notice having been issued demanding excise duty u/s 11A of Rs. 7,01,795/- on goods cleared to the domestic tariff area, custom duty to this extent could not be confirmed by the Commissioner has to be accepted. The notice has correctly demanded excise duty on goods cleared from the factory to a buyer in India. The order of the Commissioner confirming the customs duty and imposing penalty under the Customs Act, 1962 to this extent is clearly incorrect, this part of the order is set aside. The Commissioner shall adjudicate on this aspect of the notice afresh. The appellant was required to keep separate accounts of imported indigenous goods without payment of duty and the identity of the goods fall short could clearly be established with reference to such accounts. It is not contended that these accounts were not kept or incorrectly kept. Therefore we find no ground to interfere with the Commissioner (Appeals) s confirming the demanding duty of the imported yarn fall short, demanding interest on such goods and imposing penalty on this appellant. There being no absolutely no explanation for the removal we do not find the quantum of penalty incommensurate with the gravity of the offence. We now take up the issue that remains in the appeals under the Central Excise Act of Opal Fabrics and Bhagatram Parmanand and the sole issue for consideration in the other appeals whether the benefit of the exemption contained in Notification No. 2/95 will be available in a case where the 100% EOU has not made any exports physically of its final products, and it has earned foreign exchange only by means of sales against payment in foreign exchange to buyers in India. Duty is demanded from Prime Furnishing and Angana Textiles on the rejects and waste of yarn that they cleared to the domestic tariff area; from Bhagatram Parmanand and Opal Fabrics on the finished goods (yarn and fabrics respectively) and rejects and wastes and from Indian Polyfins Limited on the waste. The benefit of the exemption contained in Notification 2/95 will not apply in the case before us because there has been no physical exports thereof. The second answer is contained in the decision of the Larger Bench of the Tribunal in Himalaya International Ltd. v. CCE, [ 2003 (5) TMI 79 - CEGAT, NEW DELHI] . In this decision, the Larger Bench of the Tribunal has on its view, that the judgment of the Supreme Court in SIV Industries Ltd. v. CCE [ 2000 (3) TMI 162 - SUPREME COURT] was not concerned with the cases of goods cleared from 100% EOU to the domestic tariff area which were not allowed to be sold, held the circular of the board not to be binding and said that the decision in Kuntal Granites is no good law. Hence even if it is concluded that the goods were not allowed to be sold in India, the proviso u/s 3(1) would apply. To sum up, the position would be that the value of goods (including waste, scrap and remnant) which will be entitled to the benefit of the exemption in Notification 2/95 would be 50% of the value of goods exported out of the country. Goods cleared beyond this value limit would be liable to duty as applicable without the benefit of the notification. A note of caution has to be founded here. The reference in Clause (b) to free on board value cannot be construed literally as to mean that the value of the goods exported other than in FOB terms (e.g. CIF, FOR, etc.) should not be counted. These words actually provide a uniform measure to calculate the value of goods which are exported. Thus, for example they must be so construed as to exclude cost and insurance component in case of CIF. Appeal allowed. Other appeals allowed in part. Case-Laws Central Excise Tue, 09 Dec 2003 00:00:00 +0530