2006 (1) TMI 286 - AT - Customs

Summary

Issues Involved:
The issues involved in the case are the demand of Customs duty on goods cleared into the Domestic Tariff Area (DTA) without payment, interpretation of Notification 126/94-Cus., and whether duty should be imposed on input materials or capital goods.

Customs Duty Demand:
The appellant, a 100% E.O.U. licensed for production of cut Roses, imported goods without duty payment under Notification 126/94-Cus. Investigations revealed that they cleared cut flowers into the DTA without duty payment, leading to a demand of Rs. 1,16,158. The Original authority confirmed the duty, and the Commissioner (Appeals) upheld the decision. No penalty was imposed due to the absence of mala fide.

Interpretation of Notification:
The appellant argued that duty should only be paid on input materials used in production, not on capital goods. The relevant Notification states that duty should be paid on goods used for production, manufacture, or packaging of articles. As cut flowers are not excisable, duty should be on input materials like nutrients and fertilizers. The duty demand on capital goods is not sustainable as per the Notification, as duty on capital goods would be collected at the time of de-bonding.

Decision:
The Tribunal reviewed the case and found that the duty demand was not clearly justified in the impugned orders. They agreed with the appellant's interpretation that duty should be on input materials, not capital goods. As the duty demand on capital goods was not in accordance with the Notification, the appeal was allowed with consequential relief. The duty demand on the entire capital goods for clearing rejected cut flowers into the DTA was deemed unsustainable.