TaxTMI 
TaxTMI 
2008 (9) TMI 131
X X X X Extracts X X X X
X X X X Extracts X X X X
....Dilasoft' resulting in violation of condition of Notification No. 8/97-C.E., dated 1-3-97. 2. By 2 separate Orders-in-Original dated 24-3-99 the Adjudicating authority dropped the proceedings initiated against the assessees holding that in the case of valuation of goods manufactured by 100% EOU and cleared into DTA, the invoice price is available to the proper officer and unless it is proved that the said invoice price is not the actual transaction value, the same is acceptable in terms of the provisions of Rule 8 of the Revised Customs Valuation Rules, 1988 for the purpose of assessment in the light of Circular F. No. 330/46/97-CX, dated 20-8-97, and holding that the use of Dilasoft which is a consumable does not disentitle the assessee to the benefit of exemption in terms of Notification No. 8/97-CE., in the light of CBEC clarification issued by Circular dated 5-5-98 to the effect that the benefit of Notification No. 8/97-C.E. is available to a unit even if the imported consumables are used, as the Notification does not debar the use of imported consumables. Aggrieved by the above orders, the Revenue went up in appeal before the Commissioner(Appeals), who by the impugned order....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ect of clearances of Terry Towels into DTA. (5) The Assessee has cleared the goods into DTA in excess of the quantity permitted by the Development Commissioner. 3. We have heard both sides. 4. We first take up the additional ground permitted to be raised by the Revenue viz, that the provisions relating to quantity restriction applicable to normal goods as laid down in Para 9.9(b) of the 1992-2002 Exim Policy would not be applicable to such goods and the restriction laid down in Para 9.9.(a) read with sub-clause (iii) of the third proviso to Notification No. 2/95-C.E., dated 4-1-95 as amended by Notification No. 100/95-C.E., dated 2-6-95 would be applicable to such goods viz, that the benefit of Notification is available only upto 5% of the value of production of rejects cleared into DTA. According to the Revenue quantity cleared in excess of the above mentioned permitted quantity is not entitled to the benefit of Notification No. 2/95-C.E., dated 4-1-95 as amended. 5. The ld. Counsel for the respondents strenuously contends that it is not permissible for the Revenue to raise this additional ground at this belated stage particularly when the entire case of the department....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the case of a Software Technology Parks (STP) unit, from so much of the duty of excise leviable thereon under section 3 of the said Central Excises and Salt Act as is in excess of the amount calculated at the rate of fifty per cent of each of the duties of customs, which would be leviable under section 12 of the Customs Act, 1962 (52 of 1962) read with any other notification for the time being in force issued under sub-section (1) of section 25 of the said Customs Act on the like goods produced or manufactured outside India if imported into India: Provided that the amount of duty payable in accordance with this notification in respect of the said goods shall not be less than the duty of excise leviable on the like goods produced or manufactured outside the hundred per cent export-oriented undertaking or free trade zone or Electronic Hardware Technology Park (EHTP) unit or Software Technology Parks (STP) unit which is specified in the said Schedule read with any other relevant notification issued under sub-rule (1) of rule 8 of the Central Excise Rules, 1944 or sub-section (1) of section 5A of the said Central Excises and Salt Act, as the case may be: Provided further that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2-97, dated the 30th April, 1995." (iii) notification of the Government of India in the Ministry of Commerce No. 5/(RE-95)/92-97, dated the 30th April, 1995." (B) for the third proviso, before the "Explanation", the following provisos shall be substituted, namely "Provided also that -: (i) in the case of said goods, other than software, rejects, scrap, waste or remnant,- (a) such goods being cleared for home consumption are identical in all respects with the goods exported or expected to be exported from the unit during a specified period for such clearances in terms of the Export and Import Policy, 1st April, 1992 - 31st March, 1997; (b) the value of such goods being cleared for home consumption from the unit specified in Column (2) of the Table hereto annexed does not exceed the percentage limit of the entitlement as specified in the corresponding entry in Column (3) of the said Table, for such clearances calculated with reference to the total value of production of the goods which are identical in all respects to those under clearance; (c) the balance of the production of goods which is identical to such goods under clearance for home consumption is exported....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fit of Notification on this ground, and no finding therefore recorded thereon, the interest of justice require this issue be remanded to the adjudicating authority for decision after extending a reasonable opportunity to the assessee of being heard in their defence. 8. As regards valuation, the lower Appellate Authority has recorded a clear finding that Terry Towels in Grade I, II & IV cleared into DTA are assorted defective lots which are not export worthy and therefore the question of adopting F.O.B. value of exports of Terry Towel by the assessees does not arise. He has found as under:- Grade. I : Terry Towels manufactured from dyed yarns comes under this category. All left over towels from expert quality due to various defects, viz, no guarantee of assortment, colour fastness, weaving delects, etc. are covered under this category; Grade II: These Towels are manufactured in grey form and piece dye, falls under this category. All mixed sizes and non-assorted Towels, having no guarantee of assortment, or colour are covered by this category; Grade IV: Pieces having no Terry, but only plain fabrics, which is in the form of cut pieces are falling under this category. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rn to facilitate its winding on cones and is used in knitting hosiery is not consumable but raw material and therefore the cotton manufactured with imported wax is not eligible to the benefit of concessional rate of duty in terms of Notification No. 8/97-CE. He also refers to the definition of softener in the Condensed Chemical Dictionary by J.L Sharma & Nand Kishore Garg, which states that softener may be added during the processing for facilitating operations or it may be present in the finished product. 10. On the other hand, the ld. counsel for the respondents contends that Dilasoft is a consumable and use of imported consumables will not debar the respondents from the benefit of the Notification, as clarified by the CBEC Circular No. 389/22/98, dated 5-5-1998. 11. We find that the lower Appellate Authority has accepted the assessee's submission that Dilasoft is used for finishing of the fabric and will not form part of the end product, without such a claim being substantiated with reference to any technical literature. Further, in the light of the decision of the Apex Court in the case of Ballarpur Industries and Eastend Paper supra, the presence of the imported chemical....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ergence of the desired end product, that having regard to its importance in an indispensability for the process, it could be said that its very consumption on burning up is its quality and value as raw material. In such a case, the relevant test is not its absence in the end product, but the dependence of the end product for its essential presence at the delivery end of the process. The ingredient goes into the making of the end product in the sense that without its absence the presence of the end product, as such, is rendered impossible. This quality should coalesce with the requirement that its utilization is in the manufacturing process as distinct from the manufacturing apparatus". 15. It is to be noted that cost of dye varied between 2 and 2.5% of the total production cost. The denim is manufactured from cotton and not from indigo. The conditions for getting the benefit of the Notification is that the end products should be wholly manufactured from the raw material produced and sold in India. 16. It is to be noted that dominant ingredient test has not been applied in the instant case; so also the effect of value addition, in Ballurpur's case (supra) it was held in para 1....