2015 (2) TMI 125 - AT - Customs

100% EOU - DTA clearances - products are not similar to the goods exported or expected to be exported - Denial of benefit of concession availed under Notification No. 23/2003-C.E., dated 31-3-2003 - Held that - If a unit is manufacturing only one product, the unit can sell 50% of FOB value of exports and if the unit is manufacturing more than one product and exporting, they can sell 90% of FOB value of export of the specific products subject to the condition the average DTA sale does not exceed 50%. Therefore, the most important question that arises is whether the assessee before us is engaged in the manufacture of one product or multiple products. Apparently, the Department has taken a view that it is multiple products and a common man s understanding would be the same. Going by layman s understanding and going by the meaning of similarity in the dictionary, it is difficult to accept the submission that the 4 items in dispute are similar to the ones which have been exported. The reliance on Appendix 16A which gives the list of products which would be eligible for the facility on the ground of 100% exports, it appears that even though the heading gives tentative list of products, the objective in the list does not seem to list out individual products rather than category. Decision in the case of Consolidated Coin Co. Ltd. (2013 (2) TMI 416 - CESTAT NEW DELHI) is only an interim order and the Tribunal was considering dispensation of pre-deposit. In that case, the Tribunal straightaway accepted the similarity of the items in dispute and when there is no discussion and no law has been laid down, this decision cannot be applied. As regards the decision in the case of Hindustan Lever Ltd. (2010 (10) TMI 532 - CESTAT, CHENNAI), this was rendered while considering the Notification No. 2/95-C.E. and there a view was taken that fresh mushrooms and processed mushrooms are similar and it was held that both belong to same classification of goods and therefore similar. In this case also, there was no detailed discussion and the consideration was only of the products before the Tribunal. When decisions are taken in respect of particular products, it may not be correct to apply the decisions straightaway to other products. The discussion above would show that this is a case where it cannot be said that appellant has a strong prima facie case but issue is one which is highly technical, debatable and requires consideration of various provisions of FTP, policy relating to 100% EOU and also technical terms and the meaning of the word similar and its detailed examination which can be done at the time of final hearing. - Partial stay granted.

Summary

Issues Involved:
1. Jurisdiction of the Commissioner of Central Excise.
2. Classification of products for concessional duty under Notification No. 23/2003-C.E.
3. Interpretation of the term "similar goods" under the Foreign Trade Policy (FTP) and Customs Valuation Rules.
4. Validity of public and trade notices issued by the Commissioners.

Detailed Analysis:

1. Jurisdiction of the Commissioner of Central Excise:
The appellant contested the jurisdiction of the Commissioner of Central Excise, arguing that the administrative control over 100% EOUs should be with the Commissioner of Customs as per Board's circulars. The circulars cited included Circular No. 72/2000-Cus., Circular No. 31/2003-Cus., and Circular No. 3/2006-Cus., which outlined that Bangalore Customs had administrative control over EOUs in specified districts. However, Circular No. 932/22/2010-CX, dated 4-8-2010, indicated a shift in administrative control to Central Excise formations for better administration and future GST implementation. The Tribunal agreed with the respondent's submission that the administrative control had indeed shifted to the Commissioner of Central Excise, validating the public and trade notices issued.

2. Classification of Products for Concessional Duty:
The appellant argued that the products in question (Renerve capsules, Renerve Plus capsules, Renerve BT capsules, and Renerve BT Plus capsules) were manufactured wholly from indigenous materials, with medium chain Tri Glyceride being a consumable lubricant, not a raw material. However, the Commissioner's order indicated that these products were made from imported raw materials or materials procured from dealers who imported them, thus not qualifying as indigenous materials. The Tribunal decided to leave this issue for final hearing, noting that the appellant had paid duty under protest.

3. Interpretation of the Term "Similar Goods":
The appellant challenged the denial of concessional duty under Notification No. 23/2003-C.E., arguing that the term "similar goods" should be interpreted based on the FTP rather than Customs Valuation Rules. The FTP allows EOUs to sell products similar to those exported in the DTA. The Tribunal noted that the meaning of "similar goods" as per Customs Valuation Rules was applied in the notice, which was contested by the appellant. The Tribunal acknowledged the complexity of this issue, requiring detailed examination at the final hearing.

4. Validity of Public and Trade Notices:
The appellant argued that the public and trade notices issued by the Commissioners were based on an erroneous understanding of the circulars. The Tribunal found that the notices were correctly issued as per the updated circulars, which shifted administrative control to Central Excise formations, including for Bangalore Customs.

Conclusion:
The Tribunal concluded that the appellant did not have a strong prima facie case. Given the technical and debatable nature of the issues, particularly the interpretation of "similar goods" and the classification of materials, the Tribunal required the appellant to deposit 25% of the duty demanded within eight weeks. The balance of convenience and interest of justice justified this decision. The Tribunal granted a stay on recovery of the remaining dues for 180 days, subject to the appellant's compliance with the deposit requirement.