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2018 (1) TMI 1379 - HC - Central Excise100% EOU - Valuation - cotton waste cleared to DTA sales - view of the Department is that sale value of cotton waste should be included in arriving at the eligible quantum of sale in DTA - Held that - Learned Tribunal has rightly held that obtaining soft cotton waste in the course of carding and combing ginning cotton does not amount to manufacture and no new product with distinct name usage and character emerges - The cotton waste is exempted under Notification No.23/2003-CE without any condition. The Assistant Development Commissioner unconditionally exempted from duty. There is no merit in the present appeals and no substantial question of law arise in these appeals - appeal dismissed - decided against Revenue.
Issues:
1. Dispute over the treatment of cotton waste cleared to DTA sales. 2. Interpretation of Exim Policy provisions regarding the inclusion of cotton waste in DTA sales entitlement. 3. Applicability of concessional duty rates on cotton goods based on inclusion of cotton waste in DTA limit. 4. Authority of the Development Commissioner in determining DTA sales entitlement. 5. Impact of unconditional duty exemption on the calculation of DTA sales entitlement. Issue 1: Dispute over the treatment of cotton waste cleared to DTA sales The case involved a dispute regarding the treatment of cotton waste cleared to Domestic Tariff Area (DTA) sales. The Department contended that the sale value of cotton waste should be included in determining the eligible quantum of sale in DTA, leading to the initiation of proceedings to demand Central Excise duty on cotton yarn cleared to DTA. However, the original authority dropped the demand on cotton waste cleared to DTA. Issue 2: Interpretation of Exim Policy provisions The Tribunal examined the provisions of the Exim Policy 1999-2002 and Notification No.23/2003-CE to determine the treatment of cotton waste. It held that the cotton waste obtained during the manufacturing process did not amount to a new product and was exempted under the notification without any conditions. The Assistant Development Commissioner clarified that as cotton waste was unconditionally exempted from duty, it should not be counted for DTA sales entitlement, as per the Exim Policy provisions. Issue 3: Applicability of concessional duty rates The appellant argued that the respondent cleared cotton waste without including it in the DTA limit, resulting in the payment of concessional duty rates for cotton goods exceeding the 50% limit. The appellant highlighted the provisions of the Exim Policy 2004-2009, emphasizing that goods and waste/scrap/remnants were subject to an overall ceiling of 50% of FOB value of exports, beyond which full duties would apply. Issue 4: Authority of the Development Commissioner The respondent's counsel referred to a decision by the Gujarat High Court, emphasizing that the Government cannot dispute the value of clearance allowed by the competent authority, in this case, the Development Commissioner. The counsel supported this argument by citing a communication from the Assistant Development Commissioner, stating that the value of cotton waste clearance should not be counted against DTA sales entitlement. Issue 5: Impact of unconditional duty exemption Considering the unconditional duty exemption on cotton waste, the Tribunal upheld that obtaining cotton waste did not amount to manufacturing a new product. It reiterated that the cotton waste was exempted without any conditions, and the Assistant Development Commissioner had the final authority in such matters. Consequently, the Tribunal dismissed the appeals, stating that no substantial question of law arose in the case. This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, the arguments presented by both parties, and the legal interpretations made by the Tribunal in reaching its decision.
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