2005 (2) TMI 564

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.... L.P. Asthana, learned Advocate, mentioned that the Appellants cleared Tomato Paste, manufactured by them in their 100% Export Oriented Undertaking, to Bhutan in 1993 and 1994 without payment of Central Excise duty; that subsequently the duty has been demanded from them on the ground that as the payment of goods sold has been received on rupee account in contravention of the conditions stipulated in Notification No. 150/81, dated 29-7-1981 regarding obtaining payment in freely convertible currency, the duty is payable at the rates applicable to excisable goods produced in 100% Export Oriented Undertaking, when sold in India. The Learned Advocate submitted that Bhutan is an independent sovereign State and as such all supplies to Bhutan are e....

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....s, 1944 is permissible under bond without payment of Excise duty subject to certain conditions; that one of the conditions is that the payment for the export is received in freely convertible currency; that as in the present matter, admittedly the payment has not been received in freely convertible currency, the Appellants were not eligible to export goods under bond and therefore the duty liability arises on the goods so exported to Bhutan; that one of the objects of creating 100% Export Oriented Undertakings is that the goods are exported to general currency area so that precious foreign exchange is earned. He, further, mentioned that the Board has also clarified vide Circular No. 48/95, dated 16-5-1995 that exports to Nepal are required ....

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....as may be specified therein. One of the conditions of the Notification issued under Rule 13(2) is that the payment for the goods shall be in freely convertible currency. It is not in dispute in this case that the payment for export was not in freely convertible currency. Even if the contention of the Revenue is accepted that as the payment has not been received in freely convertible currency in respect of export made to Bhutan and the duty of excise is payable, the fact remains that Notification No. 125/84-C.E., dated 26-5-1984 "exempts all excisable goods produced or manufactured in a hundred per cent export oriented undertaking from the whole of the duty of excise leviable thereon under Section 3 of the Central Excises and Salt Act, 1944 ....