2003 (10) TMI 519 - AT - Central Excise

Summary

Issues:
- Appeal against Order-in-Original confirming demand of Central Excise duty and imposing penalties for sales made to Domestic Tariff Area.
- Interpretation of Export Import Policy regarding clearance of goods in Domestic Tariff Area.
- Dispute over deemed export benefit for additional DTA clearance.
- Review of permission granted by Development Commissioner for DTA clearance.
- Calculation of excess DTA clearance and consideration of rejects in DTA sales entitlement.

Issue 1: Appeal against Order-in-Original
The case involved M/s. Euro Cotspin Ltd. and others appealing against Order-in-Original No. 5/2002 confirming the demand of Central Excise duty and penalties for sales made to Domestic Tariff Area (DTA). The Appellants argued that they were a 100% Export Oriented Unit (EOU) permitted to clear final products in DTA up to a certain limit based on the Export Import Policy.

Issue 2: Interpretation of Export Import Policy
The Appellants contended that they were operating under the quarterly basis scheme for DTA clearance as allowed by the Export Import Policy. They argued that the Commissioner's decision to restrict clearance to the prescribed limit of 50% of the FOB value of previous year exports was incorrect. They relied on specific provisions in the Policy regarding the sale of rejects and waste in DTA.

Issue 3: Dispute over Deemed Export Benefit
The Appellants disputed the denial of deemed export benefit for the purpose of additional DTA clearance beyond the permissible limit. They cited relevant cases and provisions to support their argument that the calculation of excess DTA clearance was incorrect and that they were entitled to sell rejects and waste in DTA as per the Policy.

Issue 4: Review of Permission by Development Commissioner
The Department sought clarification from the Development Commissioner regarding DTA sales entitlement against deemed export. The Development Commissioner clarified that DTA sales entitlement was allowed against physical exports only, and no entitlement against deemed export was issued after a certain date. The Appellants argued that the permissions granted to them had not been reviewed, and therefore, the Revenue could not disallow the clearance based on FOB value restrictions.

Issue 5: Consideration of Rejects in DTA Sales Entitlement
Regarding the clearance of rejects, the Department argued that the Appellants had not maintained proper records, and therefore, the clearance of rejects should not be allowed over the prescribed limit. However, the Appellants maintained that they had permission from the Development Commissioner to clear rejects, and invoices were marked as such. The Tribunal found in favor of the Appellants, stating that the Department had not rebutted the submissions and that the Appellants had followed the permission granted by the Development Commissioner.

In conclusion, the Tribunal set aside the impugned order and allowed all the appeals based on the arguments presented by the Appellants regarding the interpretation of the Export Import Policy, permissions granted by the Development Commissioner, and the clearance of rejects in DTA sales entitlement.