2003 (12) TMI 114 - AT - Customs

Demand duty - EOU goods cleared to DTA - cut rose flowers for export - interest and penalty - HELD THAT - It is well settled in the case of M/s. Vikram Ispat v. Commissioner of Central Excise 2000 (8) TMI 111 - CEGAT, NEW DELHI that goods produced in an EOU cannot be treated as imported goods and subjected to customs duty. The duty payable in respect of such goods is the duty of excise u/s 3 of the Central Excise Act, 1944. Therefore, the duty demand made in the impugned order u/s 28 of the Customs Act is not sustainable. Accordingly, we set aside the impugned order and allow the present appeal. However, we make it clear that revenue authorities will be at liberty to demand duty on the imported inputs, if any, used in the production of the cut-flowers in question. The appeal is disposed of as above.

Summary

Issues Involved:
The issues involved in the judgment are the demand of customs duty, interest, and penalty on goods produced by an EOU and sold in the domestic tariff area, the applicability of central excise duty versus customs duty on non-excisable goods, and the interpretation of relevant notifications and circulars.

Customs Duty Demand:
The Commissioner demanded customs duty, interest, and penalty from the EOU for goods cleared to the domestic area. The appellant argued that goods produced in an EOU are subject to central excise duty, not customs duty, as per settled law. The appellant also highlighted a clarification by the Central Board of Excise and Customs regarding duty on non-excisable goods sold to the domestic area from an EOU.

Legal Position and Tribunal's Decision:
The Tribunal noted that goods produced in an EOU are not to be treated as imported goods subject to customs duty but are liable for central excise duty. The duty demand under the Customs Act was deemed unsustainable, and the impugned order was set aside, allowing the appeal. However, the revenue authorities retain the right to demand duty on any imported inputs used in the production of the goods.

Clarification and Precedent:
The Tribunal referenced a previous decision where it was held that goods cleared by an EOU to the domestic area are not imports under the Customs Act but are subject to central excise duty. The Tribunal emphasized that the duty payable for goods produced in an EOU is under the Central Excise Act, not the Customs Act.

Conclusion:
The Tribunal ruled in favor of the appellant, setting aside the customs duty demand and emphasizing the distinction between customs duty and central excise duty for goods produced in an EOU. The judgment clarified the applicable duty and allowed for the possibility of duty on imported inputs used in production.