2009 (6) TMI 899 - AT - Customs

100% EOU - DTA Clearance of Shrimp feed - concessional effective rate in terms of N/N. 2/95-C.E. dated 4-1-95 - denial of benefit of Notification on the ground that the DTA clearances made by it during the material period were in excess of 50% of the FOB value of the physical exports - Held that - Under Notification 2/95-C.E. ibid an EOU was liable to pay on DTA clearances only 50% of the duty of excise equivalent to the duty of customs leviable on like goods (if imported in India) u/s 12 of the Customs Act read with relevant exemption Notification. In the instant case the Secretariat of Industrial Assistance Ministry of Industry specifically permitted the appellant EOU to sell the entire production of shrimp feed within the country and the unit was not allowed to export the same. The Development Commissioner considered the DTA sales for the purpose of discharging export obligation without the EOU making physical exports - the EOU cannot be denied the benefit of Not. No. 2/95-C.E. as the appellant was allowed to sell the entire production of shrimp feed within the country as the DGFT authorities have considered the DTA clearances as export clearances and issued EODC to appellant. A legitimate benefit extended under a Notification cannot be denied to the EOU for no fault of theirs. The sale of shrimp feed by the EOU in DTA should be treated as deemed exports and the impugned clearances entitled to the benefit of the N/N. 2/95-C.E. allowed to it. - appeal allowed - decided in favor of appellant.

Summary

The Appellate Tribunal CESTAT CHENNAI, consisting of Ms. Jyoti Balasundaram and Shri P. Karthikeyan, heard an appeal by M/s. C.P. Aqua Culture (I) Pvt. Ltd. (CPA) regarding a demand for duty of Rs. 1,73,70,206/- on clearances of shrimp feed during the period of 1-3-1999 to 31-8-1999. The demand was based on the EOU allegedly not fulfilling the condition that DTA sales should not exceed 50% of the FOB value of exports. CPA argued that the EOU had fulfilled export obligations and achieved the stipulated NFEP as per the relevant EXIM Policy, thus entitling it to the benefit of Notification No. 2/95-C.E. The EOU was allowed to sell its entire production of shrimp feed within the country and the Development Commissioner considered DTA sales as export clearances. The Tribunal found merit in the appellant's arguments and allowed the appeal, holding that the sale of shrimp feed in DTA should be treated as deemed exports and the impugned clearances entitled to the benefit of the Notification. The appeal was allowed in favor of CPA.