2002 (9) TMI 205 - AT - Central Excise

Summary

Issues involved: Interpretation of whether only actual or physical exports should be considered for clearance in Domestic Tariff Area (DTA) by 100% Export Oriented Units (EOUs) under relevant notifications.

Summary:
The case involved an appeal by a 100% EOU engaged in manufacturing crimped/texturised yarn, seeking clearance in the Domestic Tariff Area (DTA) under specific notifications. The dispute arose when the department questioned the eligibility of the unit for DTA clearance due to alleged lack of physical exports. Three show cause notices were issued proposing duty recovery and penalties. The main issue was whether only actual exports or even deemed exports could be considered for DTA clearance.

The Tribunal, considering the case of Ginni International Ltd. v. CCE, Jaipur, held that once an EOU has permission to sell goods in DTA as per Exim Policy, the government cannot dispute the value of clearance approved by the competent authority, in this case, the Development Commissioner. The Tribunal emphasized that the Revenue cannot challenge the clearance value authorized by the Development Commissioner, and the duty demand cannot be solely based on FOB value of physical exports. The Tribunal cited previous cases to support this view, emphasizing the authority of the Development Commissioner in permitting DTA sales. The Tribunal concluded that the Revenue cannot question the value of clearance allowed by the competent authority and set aside the duty demand, allowing the appeals.

The Tribunal's decision was influenced by previous cases such as Cadilac Textiles Ltd. v. CCE & C, Surat and Virlon Textile Mills v. CCE, Mumbai-III, where similar views were upheld. The Tribunal, based on these precedents, set aside the duty demand and allowed the appeals, emphasizing the authority of the Development Commissioner in permitting DTA sales for 100% EOUs.