2013 (10) TMI 939 - AT - Central Excise

Levy of Excise duty on cut flowers - Revenue was of the view that Customs duty leviable on the imported inputs which have gone into production or manufacture of the non-excisable items and the demand of duty on cut flowers is sustainable in law Held that - The period involved in these appeals is April 1998 to September 1998 and January 1999 to June 1999 & July 1999 to September 1999 - During the period, the Central Excise Tariff did not specify cut flowers as excisable goods nor any rate of duty was prescribed for cut flowers - even after amendment to the Central Excise Tariff in 2008 cut flowers remains a non-excisable goods - If the goods are non-excisable goods, the question of levy of excise duty would not arise at all Decided against Revenue.

Summary

Issues:
Levy of excise duty on cut flowers cleared by the respondent.

Analysis:
The issue in these appeals pertains to the levy of excise duty on cut flowers cleared by the respondent companies. The adjudicating authority initially held that excise duty is applicable due to the lack of permission from the Development Commissioner of EPZ for DTA sales. However, the lower appellate authority ruled that cut flowers are not excisable goods, thus excise duty cannot be levied under section 3 of the Central Excise Act, 1944. The appellate authority referenced the Vikram Ispat case, emphasizing that only excise duty is chargeable in the case of DTA clearances by 100% EOU. The Revenue argued that duty can be charged on non-excisable items based on the customs duty leviable on imported inputs, as per Notification no. 126/94-Cus.

The interpretation of Section 3 of the Central Excise Act is crucial. The section outlines that excise duty on goods produced by 100% EOU should be equivalent to the customs duty on like goods imported into India. However, the Central Excise Tariff Act did not classify cut flowers as excisable goods during the relevant period. Even after the 2008 amendment aligning the excise tariff with the customs tariff, cut flowers were not assigned a rate of duty, indicating they remain non-excisable goods. Therefore, the question of levying excise duty on cut flowers does not arise if they are considered non-excisable goods, leading to the dismissal of the Revenue's appeals.

In conclusion, the judgment clarifies that cut flowers are not classified as excisable goods under the Central Excise Tariff Act. As a result, the imposition of excise duty on cut flowers cleared by the respondent companies was deemed unwarranted. The decision highlights the importance of aligning tariff classifications and duty rates to determine the applicability of excise duty accurately.