2008 (9) TMI 131 - AT - Customs

EOU allegation that goods were cleared into DTA at lower A.V. and goods were not manufactured wholly out of indigenous raw materials, but also out of the imported raw material Dilasoft - respondents contends that Dilasoft is a consumable and use of imported consumables will not debar the respondents from the benefit of the Notification 8/97 presence of imported material not necessary in end product for it to be treated as raw material case remitted to adj. authority for fresh decision

Summary

Issues Involved:
1. Valuation of goods cleared into DTA at lower assessable value.
2. Eligibility for exemption under Notification No. 8/97-C.E. due to use of imported raw materials.
3. Contravention of Rule 100D and 100E of Central Excise Rules.
4. Non-adoption of FOB value of exports for DTA clearances.
5. Clearance of goods into DTA in excess of the quantity permitted by the Development Commissioner.
6. Additional ground regarding quantity restriction applicable to normal goods.

Detailed Analysis:

1. Valuation of Goods Cleared into DTA at Lower Assessable Value:
The adjudicating authority initially dropped proceedings against the assessee, accepting the invoice price as the transaction value in accordance with Rule 8 of the Revised Customs Valuation Rules, 1988, supported by Circular F. No. 330/46/97-CX. The Commissioner (Appeals) upheld this, stating the department failed to prove that the invoice price was not the actual transaction value. The Tribunal confirmed this, noting that the goods were assorted defective lots not export-worthy, and hence, the invoice value could be accepted for assessment as it conformed to the transaction value under Rule 3(1) of the Customs Valuation Rules, 1988.

2. Eligibility for Exemption under Notification No. 8/97-C.E.:
The adjudicating authority and the Commissioner (Appeals) held that the use of 'Dilasoft', a consumable, did not disqualify the assessee from the exemption per Notification No. 8/97-C.E., supported by CBEC Circular dated 5-5-98. However, the Tribunal, referencing the Supreme Court's decisions in Ballarpur Industries Ltd. and Eastend Paper Industries Ltd., remanded the issue back to the adjudicating authority to reconsider whether 'Dilasoft' qualifies as a raw material or consumable, following the dominant ingredient test.

3. Contravention of Rule 100D and 100E of Central Excise Rules:
The Commissioner (Appeals) found no contravention, as the assessee followed the procedure of issuing invoices for DTA clearance. This finding was not specifically contested further in the Tribunal's judgment.

4. Non-Adoption of FOB Value of Exports for DTA Clearances:
The Commissioner (Appeals) noted that the goods cleared into DTA were assorted defective lots and not export-worthy, thus negating the requirement to adopt FOB value of exports. The Tribunal upheld this finding.

5. Clearance of Goods into DTA in Excess of the Quantity Permitted by the Development Commissioner:
The Tribunal considered the additional ground raised by the Revenue regarding quantity restriction under Para 9.9(a) of the 1992-2002 Exim Policy. It remanded the issue to the adjudicating authority to determine eligibility for the benefit of Notification No. 2/95-C.E. for quantities exceeding the permitted limit, as this was not addressed in the show cause notice or adjudicated previously.

6. Additional Ground Regarding Quantity Restriction Applicable to Normal Goods:
The Tribunal allowed the Revenue to raise this additional ground, referencing its earlier order permitting the inclusion of this ground. The Tribunal remanded the issue to the adjudicating authority to consider the eligibility of the benefit under Notification No. 2/95-C.E. for quantities exceeding the specified limit.

Conclusion:
The Tribunal upheld the findings regarding the acceptance of transaction value and the non-requirement of FOB value for defective lots. It remanded the issues concerning the eligibility for exemption under Notification No. 8/97-C.E. and the quantity restriction under Notification No. 2/95-C.E. to the adjudicating authority for reconsideration in light of relevant Supreme Court judgments and additional grounds raised by the Revenue.