TaxTMI 
TaxTMI 
2012 (6) TMI 459
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....The Assistant Commissioner confirmed the demand but did not impose any penalty; the Commissioner (Appeals) set aside the demand; hence this appeal. 2. Heard both sides: The issue for determination is whether the value of "deemed exports" has to be included in the calculation of aggregate value of clearances for the benefit of exemption in terms of SSI Notification No.1/93. This issue stands decided in favour of the assessees by the Tribunal's order in Oxide (India) Pvt. Ltd., Vs Commissioner of Central Excise, Bolpur [2001 (128) E.L.T. 490 (Tri.-Cal.)]. The relevant extract from the above decision is reproduced herein below: "We have considered the submissions made from both sides. The short point required to be decided is as to whether the value of the Deemed Export is required to be taken into consideration while computing the total value of the clearances under the provisions of Notification No. 1/93-C.E. The appellants have referred to Chapter X of Deemed Exports, Para 120 of the said Chapter defines - "Deemed Exports" meaning thereby those transactions in which the goods supplied do not leave the country and the payment for the goods is received by the supplier in India.....
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....lowing the ratio of the above decision, which has not even been challenged in the Revenue's appeal, we uphold the impugned order and reject the appeal. (Pronounced in open court on) Chittaranjan Satapathy, Member (T) Jyoti Balasundaram, Vice President Ksr 17-05-2010 Per Dr. Chittaranjan Satapathy 4. The respondents M/s. Bansal Metallic Oxides manufacture zinc oxide falling under sub-heading 2817.10 of the Central Excise Tariff. They reported a turnover of Rs.2,73,35,202/- for the financial year 1994 - 95 and availed small scale exemption during the next year 1995 - 96 under Notification No. 1/93. The benefit of the said Notification was available only if the value of clearances during the previous year 1994 - 95 was below Rs. 3 crores. The departmental authorities found that the respondents have not included clearance of Rs.32,83,894/- made to M/s. MRF Ltd. on payment of duty. By including the same, the clearance for the year 1994 - 95 becomes Rs.3,06,19,906/- making the respondents ineligible for small scale exemption for the year 1995 - 96. 5. The Central Excise Law requires payment of duty on goods cleared for home consumption within India, unless exempt....
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....ore, there was a need for specific inclusion of the same. The decision of the Kolkata Bench of the Tribunal is not good law because it equates deemed exports with exports which has been specifically disapproved by the decision of the Hon'ble Madras High Court in the case of BAPL Industries Ltd. Vs. Union of India - 2007 (211) ELT 23 (Mad.). In the said decision, the Hon'ble Madras High Court has specifically held that, "In order to distinguish deemed export from the export, a separate chapter i.e. Chapter 10 was introduced in the Export Import Policy. Each word is coined to serve different purposes. The petitioner's contention that the export and deemed export is one and the same is an incorrect obtainment in law". 8. The Central Excise Law speaks of only clearances for home consumption and for export outside India, and once it is held that deemed export is not export, automatically it comes within the category of clearances for home consumption and the value of such clearances requires to be computed for the purpose of Notification No. 1/93. 9. Moreover, I find that the respondents had the option of clearing the impugned goods to M/s. MRF Ltd. under another exemption Notific....
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....tification No.49/94-CE(NT), dated 22.09.1994 on the ground that they have not followed Chapter X procedure, they paid the duty involved. (iii) The department was of the view that the above clearances valued at Rs.32,83,894/- made to M/s. MRF Ltd., should also be included in the value of clearances for the financial year 1994-95 and that consequently the respondents exceeded the eligibility limit of Rs.3 crores during the year 1994-95 and consequently they were not eligible for the benefit of exemption under Notification No.1/93-CE for the year 1995-96. Accordingly, a show-cause notice dated 14.09.1995 was issued proposing recovery of Rs.5,75,046/- from the respondents (copy of the show-cause notice, dated 14.09.1995 has been produced by the respondents today - 26.09.2011). The respondents vide reply dated 15.09.1995 contested the show cause notice. They contended that the clearances made to M/s. MRF Ltd., against a valid advance/intermediate licences were "deemed exports" and that the said supplies could not be included in determining the aggregate value of clearances for home consumption for 1994-95 (copy of the reply has been submitted by the respondents today - 26.09.2011). T....
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.... the said Chapter. In other words, "deemed exports" are eligible only for benefits which are specifically mentioned in the said Chapters. The "deemed exports" cannot be equated as "physical exports" for all purposes and given other benefits which may be available to physical exports. (c) Notification No.1/93-CE granted exemption to clearances made for "home consumption" and the same was subject to eligibility limit relating to "clearances for domestic consumption" during the previous financial year. In the present case, clearances made to M/s. MRF Ltd., having suffered duty foregoing the benefit of Notification No.49/94-CE(NT) cannot be treated as "deemed exports". Even if they are treated as "deemed exports", they cannot be treated as clearances other than for home consumption. Learned SDR relies on the decision of the Larger Bench of the Tribunal in the case of M/s. Lakshmi Automatic Loom Work Ltd. Vs. Commissioner of Central Excise, Trichy reported in 2008 (232) E.L.T.428 (Tri.-LB) wherein it has been held that removal of inputs by a DTA unit to a 100% EOU could not be deemed to have been manufactured by them and such supplies, though "deemed exports" could not be treated on ....
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....er denying the exemption under Notification No.1/93 by holding such clearances were for "home consumption". In this regard, he relies on the decision of the Tribunal in the case of Decora Ceramics Pvt. Ltd. Vs Collector of Central Excise, Rajkot reported in 1998 (100) E.L.T. 297 (Tribunal) wherein it has been held that it was the function and duty of a statutory authority to determine the amount short levied and that when assessment was sought to be re-opened, they could also agitate any issue having a bearing on the demand though they have not agitated the same at an earlier stage. (c) EXIM Policy clearly envisages that supplies made to advance licence holders are "deemed exports" and since undisputedly M/s. MRF Ltd., were holding advance licences, the supplies made to them, notwithstanding that they paid duty subsequently, should be treated as "deemed exports". (d) Relying on decision of the Tribunal in the case of Commissioner of Central Excise & Customs, Surat Vs Amitex Silk Mills P. Ltd. reported in 2007 (216) E.L.T.589 (Tri.-Ahmd.) and in the case of Commissioner of Central Excise, Surat Vs Mudra Texturising Pvt. Ltd. reported in 2009 (235) E.L.T 674 (Tri.-Ahmd.) which ....
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....es for export. The department issued a letter dated 07.06.1995 informing the respondents that they were not eligible for availing the benefit of Notification No.49/94-CE(NT), dated 22.09.1994 as they have not followed the Chapter X procedure. Undisputedly, the respondents paid the duty involved on the said clearances without any protest. The department, thereafter, has included the said clearances valued at Rs.32,83,894/- and held that the aggregate clearances for the year 1994-95 has exceeded the eligibility limit of Rs.3 crores. Perusal of the show-cause notice dated 14.09.1995 shows that there was no dispute relating to the eligibility or other wise of Notification No.49/94-CE(NT), dated 22.09.1994 in respect of the said clearances and that the respondents were put to notice that they are not eligible for the benefit of exemption under Notification No.1/93 during the year 1995-96. Perusal of the reply to the show-cause notice, filed by the respondent indicates that they did not contest the liability to duty on the clearances made to M/s. MRF Ltd., but merely claimed that even duty paid clearances should be treated as "deemed exports" and excluded for the purpose of determining t....
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.... the manufacture of export goods but does not include capital goods used in the factory in or in relation to manufacture of export goods." Notification No.49/94-CE(NT) has been issued by the Central Government prescribing conditions under which a manufacturer can avail the benefit of duty-free procurement of raw materials and one of the conditions is that they are required to follow Chapter X procedure of the erstwhile Central Excise Rules, 1944. Hon'ble Supreme Court in the case of Hari Chand Shri Gopal cited supra held that following of the conditions of Chapter X procedure for the purpose of availing exemption notification could not be waived inasmuch as the same was aimed at ensuring that the goods were not diverted or misutilised. The submissions on behalf of the respondents that the decision of the Hon'ble Supreme Court was issued in the context of notification issued under Section 5A of the Central Excise Act and the same may not be applicable in interpreting Rule 13 and Notification No.49/94-CE(NT) which are beneficial legislation cannot be accepted. Notifications whether in the form of 'full exemption' or 'partial exemption' issued under Section 5A are also conferring b....
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....by them. In that context, in pursuance of the policy contained in EXIM Policy, DGFT authorities took into account both "physical exports" and "deemed exports" and permitted specified percentage of such clearances to be cleared to DTA on payment of applicable duties. The decisions of the Tribunal in the cited cases stand upheld by the Hon'ble Supreme Court. However, these decisions are in respect of benefits specifically made available to such "deemed exports" under EXIM Policy and no inference can be made that such "deemed exports" are to be equated to "physical exports" for all purposes. 20. The assessee sought to rely on the decision of the Tribunal in the case of Oxide (India) Pvt. Ltd., cited supra. The said decision stands distinguished in para 7 of the referral order. As noted therein, the said decision has been rendered on a finding that "admittedly deemed exports are not clearances for home consumption", whereas, there is no such admission by the Department in the present case. 21. In the present case, the interpretation relates to the term "cleared for home consumption" in respect of specified goods. The clearance effected by the respondents to M/s. MRF Ltd., cannot ....