TaxTMI 
TaxTMI 
2025 (10) TMI 1073
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....ablets and Capsules) which are, inter alia, engaged in the manufacture/export of bulk drugs, medicaments, tablets, injections including 'vaccines, injections, human insulin, injectables, pharmaceutical formulations' which are excisable goods under the Central Excise Tariff Act, 1985. They had also obtained Customs Bonded Warehouse License in terms of Section 58 & 65 of the Customs Act, 1965 duly issued by jurisdictional Assistant Commissioner of Central Excise & Customs, Aurangabad-II division, in respect of the EOU operations under bond. The appellants are also clearing the excisable goods in the Domestic Tariff Area (DTA) in terms of the notifications issued by the Ministry of Finance and the Foreign Trade Policy (FTP) issued by the Ministry of Commerce. For this purpose they are duly registered with jurisdictional Central Excise department with Registration No. AAACW2472MXM002. 2.2 In respect of the 100% EOU operations, the appellants were procuring duty free imported and indigenous capital goods and inputs by availing Notification No.52/2003-C.E. and 22/2003-C.E. both dated 31.03.2003 on the basis of Letter of Permission (LOP) dated 25.08.2003 as amended, issued by the Joint....
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....) Recombinant Hepatitis B vaccine; (iii) Recombinant Erythropoietin bulk; (iv) Erythropoietin injection; (v) Recombinant human insulin bulk; (vi) Injectable human insulin and (vii) pharmaceutical Formulations. 3.2 Learned Advocate had also stated that the appellants had achieved positive Net Foreign Exchange (NFE) during the disputed period; all the products manufactured by them are used for pharmaceutical formulations and injectables. Therefore, he claimed that these are similar goods and given the condition applicable for DTA clearances as per Para 6.8(a) is up to 50% of FOB value of exports, for availment of concessional duty. Thus, he stated that the appellants have complied with the conditions of Notification No. 23/2003-C.E. dated 31.03.2003 and Para 6.8(a) of FTP. 3.3 Learned Advocate further stated that the competent authority for implementation of FTP being the Development Commissioner, had not raised any objection and have on the other hand had renewed their LoP from time to time, which indicate that they have complied with all the provisions of FTP. Further, Development Commissioner is the competent authority to decide whether goods are eligible for clearance in DT....
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....in the impugned order is sustainable. 5. Heard both sides and perused the records of the case. We have also perused the additional written submissions presented in the form of paper book for this case. 6. The issues involved in these appeals are as follows: (i) to determine whether the DTA clearance of excisable goods made by the appellants is in violation of Para 6.8(a)/6.8(k) of the Foreign Trade Policy or not? (ii) whether the differential duty confirmed and imposition of penalty on the appellants in the impugned order is legally sustainable or not? 7. In order to address the above issues relating to Foreign Trade Policy, classification of excisable goods, we would like to refer the relevant legal provisions contained in Central Excise Act, 1944 for levy of Central Excise duty on 100% EOUs and Foreign Trade Policy. The disputed period in the case is from January, 2008 to September, 2015. Central Excise Act, 1944 Valuation of excisable goods for purposes of charging of duty of excise. "Section 3. Duties specified in First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 to be levied. - (1) There shall....
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...., units which are manufacturing and exporting more than one product can sell any of these products into DTA, upto 90% of FOB value of export of the specific products, subject to the condition that total DTA sale does not exceed the overall entitlement of 50% of FOB value of exports for the unit, as stipulated above. No DTA sale at concessional duty shall be permissible in respect of motor cars, alcoholic liquors, books, tea (except instant tea), pepper & pepper products, marble and such other items as may be notified from time to time. Such DTA sale shall also not be permissible to units engaged in activities of packaging/labelling/segregation/refrigeration unit/ compacting/micronisation/pulverization /granulation/ conversion of monohydrate form of chemical to anhydrous form or vice-versa and such other items as may be notified from time to time. Sales made to a unit in SEZ shall also be taken into account for purpose of arriving at FOB value of export by EOU provided payment for such sales are made from Foreign Exchange Account of SEZ unit. Sale to DTA would also be subject to mandatory requirement of registration of pharmaceutical products (including bulk drugs). ....
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.... as per the legal provisions of the Central Excise Tariff Act of 1985, for legal purposes, the classification of goods shall be determined according to the terms of the headings of the tariff and any relative Section notes or Chapter notes. We also find upon careful reading of the various tariff entries of chapter 30 covering Pharmaceutical products and more particularly chapter heading 3002, we find that the following categories of goods are covered under its scope: (i) Vaccines, toxins, cultures of micro-organisms and similar products, cell cultures, Immunological products used for treatment of various ailments. (ii) Vaccines for human medicine and single vaccines for Hepatitis is specifically covered under tariff item 3002 4112; and similarly single vaccines for Cholera and typhoid, Tetanus, Polio, Tuberculosis, Rabies, Japanese encephalitis and Whopping cough (pertussis) are covered under tariff items 3002 4111, 3002 4113, 3002 4114, 3002 4115, 3002 4116, 3002 4117 and 3002 4118, respectively. (iii) All types of 'Vaccines' used as human medicine which are not covered specifically as above are covered under tariff item from 3002 4119; (iv) Mix....
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....ted or expected to be exported from units. In the legal provision governing the levy of excise duty under Section 3 of the Central Excise Act, 1944 duty leviable on 'like' goods imported into India is mentioned. However, in CBIC Circular No. 7/2006-Customs dated 13.01.2006, it is stated that the definition of 'similar goods' would be based on the definition of similar goods as provided in the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. The term 'similar goods' means goods which is although not alike in all respects, have like characteristics and like constituent materials which enable them to perform the same functions and to be commercially interchangeable with the goods which have been exported or expected to be exported having regard to the quality, reputation and the existence of trade mark and produced in the same unit by the same person who produced the export goods. Since Chapter 30 and more particularly heading 3002, covers all types of pharmaceutical products, it is not feasible to treat the goods covered under single heading as other than 'similar goods'. Further, even if we consider by usage of such goods, these are used vaccines, injections....
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....phs (a), (d), (e) and (g) of Paragraph 6.8 of the Foreign Trade Policy (FTP) and DTA sale should not exceed 50% of FOB value of similar goods which are exported or expected to be exported from the unit during the specified period, whereas the clearances effected by the assessee were covered under Para 6.8(K) of the FTP and the assessee had failed to export similar goods during the stipulated period to the extent of accruable DTA sale entitlement, Therefore, the assessee was not eligible to avail the said concession and they were required to pay duty on DTA clearances and accordingly differential duty has been demanded from the assessee 13.1 I find that the SCN has been issued due to Para 6 of LAR No. CRA/EOU/LAR/Dec05/1056 dated 31.1.2006 of CERA (CAG office) which was converted into SOF F. No. CRA/EOU/Review/SF.No.6/05- 06/38 dated 2.6.2006 on the objection that the DTA clearances effected by the assessee were covered under Para 6.8(k) of the FTP. The Department had contested this CERA objection based on the permission issued by Development Commissioner, SEEPZ, as per para 6.8(a) of FTP, and other relevant paras of the FTP. CERA has finally closed the objection and inform....
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.... is correct and that in terms of the Para 6.8 of FTP, in respect of the units which are manufacturing more than one item, goods whose exports are less can be cleared more in the DTA subject to the overall limitation of 50% of the FOB of export performance. Chennai Bench of the Tribunal in the case of M/s ABI Showatech India Ltd 2019-TIOL-1246-CESTAT-Mad held that "6.2. Thus it can be seen that within entitlement of DTA sale, units may sell in DTA, its products similar to goods which are exported or expected to be exported from units. The description of goods in the green card does not differentiate or specify goods on the basis of customs tariff. It merely treats them belonging to a class. Bearing machines are considered by department as part of turbo charger which are parts of automobile, then precision automotive components also being part of automobiles should fall in the same class, since they are engaged in manufacture and export of various part of automobile as stated in the green card. Further, as per the table given in paragraph 2 above, the appellant has cleared in DTA bearing housing only. Precision automotive competent was not cleared in DTA. In paragraph 6.8 wh....
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.... 12,50,000 nos. of turbo charger component which was even subsequently enhanced to 32,00,000 nos. of turbo charger components, the appellant cannot then be said to have caused the breach of the conditions. Both bearing housing and turbine wheel are surely component parts of turbo charger, the fact which has been admitted by the adjudicating authority in para 12 of the impugned order. If, on the other hand, the permission granted by the Development Commissioner to the EOU was only for bearing housing, in that event, the clearance of turbine wheel which is part distinct from bearing housing would have come under the scanner. But when the permission is generic and only states "turbo charger components" the condition of the impugned notification gets satisfied so long as the parts that they exported and the parts cleared into DTA are both like components of turbine charger." 17. In the case of Consolidated Coin Company Pvt. Ltd. 2013 - TIOL- 139-CESTAT-DELHI Tribunal held that as regards the third point of dispute since the items exported by the appellant the "copper alloys coins blanks and copper zinc nickel strip" are the similar products, both falling under heading 7409 and....
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....We find that EOUs are given a facility to clear the goods in DTA, as a reward for the exports made by them subject to the fulfilment of positive NFE. It may so happen that EOU unit manufacturing more than one product may not be able to export all the products in the same proportion; the overseas market may not have demand for all the products manufactured by them. Understandably, EOU cannot be expected to throw away or destroy the product or sell in DTA at a higher rate of duty resulting in financial loss. We find that, under these circumstances, a provision has been built in to the FTP, provision has been made to enable the manufacturer to sell such goods in DTA. The Limitation of 90% of FOB of the products appears to have put to ensure that there is export of all the products manufactured and to ensure that a product which is not at all exported is not cleared in DTA. We find that, as the EOU scheme is based on value of clearances, once export obligation is fulfilled, the manufacturer cannot be constrained to clear particular products in DTA in proportion to the export of the specific product. This appears to be the understanding of the tribunal in the series of judgments cited a....
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....6 (338) ELT 545 (Del), where in it was held that 33. There is merit in the contention of the petitioner that in the event of conflict of views between two ministries of the Central Government, the view taken by the ministry that is primarily responsible for the policy in question, which in this case is the FTP, should prevail. The SFIS was introduced by the Ministry of Commerce and its instrumentality, i.e., the DGFT has been statutorily entrusted with the final word on the interpretation of the FTP. The letter dated 6th September, 2013 from the Commerce Secretary to the Revenue Secretary is instructive. It refers to Circular No. 837/14/2006, dated 3rd November, 2006 issued by the C.B.E.&C. under the Ministry of Finance which acknowledged that payment of customs duty could be made by using the duty credit scrips. In particular it was pointed out that the expression "duty free credit scrip" had been used incorrectly and that the correct phrase should have been "duty credit scrips". It was suggested that the "insistence by C.B.E. & C. that goods imported by use of SFIS scrip may not be alienated unconditionally, even after three years of import, can be attributable to this inadverten....
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....80/- thus DTA clearances were 70,205% of the same. It can be seen that facts of the case are identical. Tribunal also held that Bearing Housing and Precision components were similar goods. In the instant case as per above discussion we held that Twisted yarn and Ropes are under the same category of goods under SION and can be held to be similar goods in the broader sense of the word. Therefore, we find that the case is in no way in favour of the Revenue. Learned Authorised Representative for the Revenue, countering the cases cited by the appellants to explain the similarity of nature of goods, submitted that the issues discussed therein are different. While we agree with this contention we hold that the cases can be relied as far as the understanding of similar goods is concerned. Therefore, we find that the contentions of Revenue are not acceptable and the ratio of the cases cited is valid to arrive at the conclusion that the impugned goods are similar in nature. Learned Authorised Representative for the Revenue further sought to rely on the case of Shri Dilip Kumar and others. We are of the considered opinion that the issue doesn't pertain to interpretation of a Notification but ....
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....mmissioner, while permitting sale of cotton yarn etc. valued Rs. 801.69 had taken into consideration not only physical Exports (Rs. 1419.10 lakhs) but also supplies to other EOU units under paragraph 9.10 of the EXIM Policy (Rs. 184.28 lakhs). We find from Appendix 42 of Handbook of Procedure, the Development Commissioner of the EPZ concerned will determine the extent of the DTA sale admissible and issue a goods removal authorization in terms of value. It is not in dispute that in the present matter the Development Commissioner had issued such an authorization in terms of value (Rs. 801.69 lakhs). We find force in the submission of the learned Counsel for the Appellants that once the Development Commissioner has allowed them the permission to sell the goods up to a fixed value in the DTA, the Revenue cannot disallow the clearance and demand Central Excise duty on the ground that the entitlement was required to be restricted to 50% of the FOB value of Physical Exports. If the Revenue is of the view that the value of deemed export should not have been taken into consideration for arriving at the value of goods to be allowed to be sold in the DTA, the matter should have been taken up ....