2008 (7) TMI 288 - AT - Customs

DTA clearances of the cut-flowers (non-excisable goods) - Custom Duty on the inputs used in the production of those cut-flowers - as per Notification126/94-CUS., as it existed at that time, Custom duty was equal to the Customs Duty chargeable on the import of cut-flowers, as such words in an amount equal to the Custom Duty leviable on such articles, as if imported, as such mentioned in Notification ibid should be read as it is so, custom duty on import of Cut flowers is rightly charged

Summary

Issues:
1. Interpretation of Notification No. 126/94-Cus. regarding Custom Duty on DTA clearances of non-excisable goods.
2. Calculation of Custom Duty on inputs used in the production of cut-flowers cleared to DTA.
3. Prospective effect of amendment to Notification No. 126/94-Cus.
4. Applicability of previous tribunal judgments on similar cases.

Analysis:

Issue 1: Interpretation of Notification No. 126/94-Cus.
The case involves the appellant, a 100% EOU in the Flori Culture Sector, making DTA clearances of cut-flowers without payment of duty. The dispute revolves around whether these clearances attract Custom Duty chargeable on inputs used in production. The appellant argued that only Custom Duty on inputs should be charged, citing previous tribunal judgments. The Revenue contended that the duty on inputs should be equal to the Custom Duty on the imported cut-flowers. The tribunal examined the provisions of para 3 (a) of the exemption Notification No. 126/94-Cus. during the relevant period and the subsequent amendment.

Issue 2: Calculation of Custom Duty on inputs
The tribunal analyzed the language of para 3 (a) of Notification No. 126/94-Cus. during the dispute period and post-amendment. It concluded that during the dispute period, the duty on inputs used in production of non-excisable goods cleared to DTA was to be calculated as an amount equal to the Custom Duty on the finished goods, as if imported. However, after the amendment, the duty was to be calculated on an actual basis. The tribunal emphasized that the amendment could not have retrospective effect and upheld the duty calculation method applicable during the dispute period.

Issue 3: Prospective effect of amendment
The tribunal clarified that the amendment to Notification No. 126/94-Cus. w.e.f. 18-05-01 could only have prospective effect. Therefore, the duty on inputs used in the production of cut-flowers cleared to DTA had to be calculated as per the provisions existing during the dispute period. The tribunal highlighted the importance of interpreting statutes without rendering any part redundant.

Issue 4: Applicability of previous tribunal judgments
The tribunal distinguished the present case from previous judgments, emphasizing that the duty charged was on inputs used in production, not on the cut-flowers themselves. It noted that the wording of para 3 (a) of the exemption notification had not been considered in previous cases. The tribunal highlighted the principle of avoiding interpretations that render parts of a statute redundant.

In conclusion, the tribunal upheld the Custom Duty charged on DTA clearances of cut-flowers, finding no infirmity in the impugned order. The appeal was dismissed, emphasizing the correct application of the duty calculation method during the relevant period.