TaxTMI 
TaxTMI 
2009 (2) TMI 631
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....cks and all types of natural stones in form of dressed block, slabs and tiles thereof. Serpentine is a natural stone which is traded under commercial name of 'green marble'. The Appellant company could import free of customs duty or indigenously procure free of central excise duty, the capital goods and rough stone blocks. The Appellant were to achieve export turnover of U.S. $ 48.97 lakhs during five years from the date of commencement of production and were to achieve positive net foreign exchange earning (NFE) as per the provisions of the EXIM policy. 1.1 The inputs and capital goods, imported by a 100% EOU are fully exempt from basic customs duty and Additional Customs Duty by Notification 53/97-Cus. and its successor Notification 52/03-Cus., dated 31-3-03 and the indigenously procured inputs and capital goods are fully exempt from basic excise duty as well as additional excise duty under Notification 22/03-C.E., dated 31-3-03. As per the provisions of the EXIM policy, an EOU, can sell a part of the production to DTA with the permission of the Development Commissioner, for which the DTA quota is fixed by the Development Commissioner, based on the export performance. The....
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....tral Excise Rules, 2002. The Commissioner by the impugned order-in-original dated 24-4-06 in respect of both the show cause notices has - (a) confirmed under proviso to Section 28(1) of the Customs Act, 1962 readwith Notification No. 52/2003-Cus., dated 31-3-03, the duty demands of Rs. 2,69,07,607/- and Rs. 28,00,379/- in respect of import of rough marble blocks by the Appellant company during the period from April 2003 to August 2005, alongwith interest on this duty at the applicable rate under Section 28AB of the Act; (b) imposed penalty of Rs. 2,97,07,986/- (Rs. 2,69,07,607 + Rs. 28,00,370/-) on the Appellant company under Section 114A of the Customs Act; (c) confirmed the demand of Central Excise duty of Rs. 1,53,58,771/- and Rs. 38,16,236/- against the Appellant company under proviso to Section 11A(1) of the Central Excise Act, 1944 in respect of DTA clearances of Dressed marble block, marble slabs and marble tiles during April 2003 - August 2005 period, alongwith interest on this duty at the applicable rate under Section 11AB of the Central Excise Act; (d) imposed penalty of ....
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.... placed on the judgments' in the following cases :- (a) PML Industries Ltd. v. CCE - 2004 (172) E.L.T. 281 (b) Kaatyayini Exports v. CCE, Mumbai - 2003 (156) E.L.T. 497 (Tri. - Mum.) (c) Titan Medical Systems v. CCE - 2003 (151) E.L.T. 254 (S.C.) (3) Duty exemption cannot be denied to DTA clearances of dressed marble blocks/marble slabs/tiles manufactured out of imported marble blocks on the ground that the item exported is Serpentine stone slabs/tiles. The Development Commissioner, in term of para 28(6) of Appendix 14-I of 2002 - 07 EXIM policy has allowed broad banding/bunching of the goods to be exported by the Appellant company without specific reference to particular export goods and accordingly the export products of the Appellant company are dressed blocks/slabs/tiles of marble, Serpentine and granite, against the export of which the Appellant company earned DTA quota. As per para 10.2 of Appendix 14I of 2002-07 EXIM policy, a EOU at no point of time shall be required to co-relate every import consignment with its export, transfer to other EOUs/SEZSTP units/EHTP ....
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..... v. CCE reported in 1995 (80) E.L.T. 145 (which has been affirmed by Hon'ble Supreme Court) and Tirupati Granite P. Ltd. v. CCE reported in 1997 (92) E.L.T. 207, holding that cutting of marble block into slabs/tiles or polishing of slabs/tiles does not amount to manufacture, no duty is chargeable on clearance of marble slabs/tiles to DTA. If the Department holds that the DTA sales were without permission, in view of Tribunal's judgments in cases of Sam Spintex Ltd. v. CCE reported in 2004 (163) E.L.T. 212 and Modern Denim Ltd. v. CCE, Ahmedabad reported in 2005 (191) E.L.T. 1174, duty on such clearances can be demanded only under Section 3(1) of the Central Excise Act, not under proviso and in that case, no duty would be chargeable. (8) The imported marble blocks are not liable for confiscation under Section 111(d) and (o) of the Customs Act, as the LOP issued to the Appellant company permits the import of the same. (9) There is no fraud, wilful mis-statement or suppression on part of the Appellant company and, therefore, neither longer limitation period of five years is invokable nor the Appellant company is liable for penalty....
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....d white marble blocks have not been used for the intended purpose and hence the same, besides not being eligible for duty exemption, are liable for confiscation. (5) As per Board's circular reported in 2008 (87) RLT 148, during the period of dispute, in case of a multi product EOU, manufacturing and exporting more than one product, the DTA sale entitlement for each product is 50% of the FOB value of the product exported. In this case, since only a miniscule quantity of dressed marble blocks/slabs/tiles and that too made out of indigenous marble blocks, has been exported, the Appellant company could not clear any dressed marble blocks/slabs/tiles made out of imported marble blocks, into DTA. (6) As per the Development Commissioner's letter dated 18-6-03 to the Appellant company regarding DTA sale permission, the DTA sale will be admissible only to similar goods or which belong to the same class as that of goods manufactured and exported from the unit. Since what was exported was the dressed blocks/slabs/tiles of the Serpentine stone, the Appellant company could not sell to DTA the dressed white marble blocks/slabs/tiles made out ....
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....the goods imported by a 100% EOU or excisable goods domestically procured by a 100% EOU, are exempt from customs duties and as well as Central Excise duties subject to the conditions specified in these notifications - the main conditions are that - (a) the goods imported free of customs duty or domestically procured free of Central excise duty are used in or in relation to manufacture of finished goods for export and (b) the EOU executes a bond, binding itself to use the duty free goods for the intended purpose, failing which it has to pay the customs duty and/or central excise duty involved on the goods alongwith interest. (c) As per specific provisions in these notifications, the duty exemption is available even if a part of the finished goods, made out of the duty free imported and/or domestically procured goods, instead of being exported, are sold in DTA as per the provisions of the EXIM policy. In this case, there is no dispute about the fact that the dressed marble blocks and marble slabs/tiles manufactured out of imported marble blocks, instead of being exported, were sold in DTA. The question t....
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....nbsp; Even the opinion of Indian Bureau of Mines, referred to in the DGFT's instructions dated 10-6-2002, relied upon by the Appellant does not say that serpentine stone is a variety of marble - all it says is that - "as per the standard references, petrologically and mineralogically, "marble", denotes metamorphic rock composed essentially of calcite, dolomite or a combination of the two and chemically, it is either pure calcium carbonate or a mixture of calcium and magnesium carbonate, but by virtue of long usage of the term by the industry, the world over involved in production and trading of the commodity, Serpentine are also included, in the term - marble". (5) Hon'ble Supreme Court in case of Akbar Badruddin Jiwani (supra) has held that - though Serpentine is sometimes is called marble in the trade, it is excluded from the purview of HSN heading 25.15. (6) In terms of price, serpentine and marble are not comparable. The imported white marble is about three times costlier than the serpentine stone, used for manufacture of dressed serpentine blocks, slabs and tiles for export. (7) ....
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.... is clear that the goods sold by an EOU into DTA must be 'similar' to the goods exported, within the meaning of the term 'similar' as defined in the Board's Circular No. 7/2006-Cus., dated 13-1-06 and in case of a multiproduct 100% EOU manufacturing say, products A and B, it is not open the unit to exclusively export the product A and keep the product B exclusively for DTA sale, unless the products A and B are similar - in fact as per the EXIM policy 2004-2009, a 100% EOU manufacturing products A and B for export, can sell into DTA one product, say A upto 75% of its FOB value of exports, within the overall DTA sale entitlement. The idea behind this condition is to prevent the misuse of 100% EOU scheme by duty free import of costly materials for use exclusively in the manufacture of finished goods for DTA sale and meeting the export obligation by exporting the finished goods made out of domestically cheap material. In this case, since export of dressed marble blocks, marble slabs & tiles made out of imported white marble blocks is almost nil, the Appellant company could not sell the products made out of imported white marble blocks unit DTA against the DTA entitlement earned by expo....
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....marble slabs/tiles and in respect of these clearances, as per the provision of the 1st proviso to para 3 of the Notification No. 52/03-Cus., only the customs duty on the imported marble blocks used for production of dressed marble blocks and marble slabs/tiles can be charged. We agree with this contention of the Appellants, as we find that during the period of dispute, there was no chapter note in chapter 25 of the Central Excise tariff, providing that the process of cutting or sawing or sizing or polishing or any other process for converting stone blocks into slabs or tiles shall amount to manufacture and such a chapter note was introduced only w.e.f. 1-3-2006 and, therefore, during the period of dispute, in view of the above-mentioned judgments of Hon'ble Supreme Court and the Tribunal, no Central Excise duty could be charged in respect of these DTA clearances and only customs duty in terms of 1st proviso to para 3 of the Notification No. 52/03-Cus. could be charged on the imported marble blocks used for making dressed marble blocks and marble slabs/tiles and this duty, as discussed in the earlier in para 4.1.3 above is, in any case, chargeable. We do not agree with the Commissio....
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....oods were being cleared by the Appellant. The Appellant's contention, on the other hand, is that the Departmental officers were aware of the fact that while dressed serpentine blocks, Serpentine slabs/tiles made out of domestically procured serpentine blocks were exported and the dressed blocks, slabs and tiles made out of imported marble blocks were cleared to DTA, in view of the facts that - (a) all exports were factory stuffed under supervision of the jurisdictional Central Excise Officers and the export documents have been certified by the central excise officers ; and (b) the Appellants vide letter dated 29-7-03 to the Assistant Commissioner clearly mentioning that they are manufacturing marble slabs/tiles and clearing the same to DTA, had asked for correct rate of central excise duty on the DTA clearances. 6.1 The LOP issued to the Appellant company and its amendments issued by the Development Commissioner from time to time and copies of which were also endorsed to the jurisdictional Assistant Commissioner, mentioned in addition to dressed marble blocks, marble slabs and marble tiles, the dressed serpentine bloc....