2024 (9) TMI 400 - AT - Central Excise

Recovery of differential duties with interest and penalty - scope of expressions deployed in Foreign Trade Policy (FTP) when appended to notification under section 5A of Central Excise Act, 1944 - N/N. 23/2003-CE dated 31st March 2003 - HELD THAT - The issue is simple enough when viewed through the prism of cross-jurisdictional lexicon. Customs authorities, empowered to deal with goods in their statutory enactment, are unfamiliar with products employed in the language of the Director General of Foreign Trade (DGFT). They have no assistance either from the Foreign Trade Policy (FTP), the notification concerned or any other authority. Indeed, that was not in the ken of the adjudicating authority as it should have been. Customs authorities, though not unfamiliar with similar , are permitted to draw upon that within the restricted framework set out for the purposes of section 14 of Customs Act, 1962. In the absence of any discussion by the adjudicating authority in the impugned order, it can only be speculated that the singular approach of customs authorities to goods has been transposed on products which, in the context of the description deployed in the Letter of Permission (LoP) issued to the appellant and plea of assessee, should have been. Guidance taken by the observation of the Tribunal in Ginni International Ltd 2001 (9) TMI 165 - CEGAT, COURT NO. IV, NEW DELHI that ' If the Revenue is of the view that the value of deemed export should not have been taken into consideration for arriving at the value of goods to be allowed to be sold in the DTA, the matter should have been taken up with the Development Commissioner who had initially accorded the permission to the Appellants. This has been the consistent view of the Appellate Tribunal wherever the permission under the Central Excise Act/Rules or Notification is accorded by an authority outside the Department.' The impugned order set aside to remand the matter back to adjudicating authority for a fresh decision based on such reference.

Summary

Issues:
Interpretation of expressions in Foreign Trade Policy (FTP) notification under Central Excise Act, 1944 regarding duty exemption and clearance restrictions for export-oriented units.

Analysis:
1. The appeal challenges an order confirming recovery of differential duties of central excise, interest, and penalty under the Central Excise Act, 1944. The dispute revolves around the interpretation of expressions in the Foreign Trade Policy (FTP) notification appended to the Central Excise Act. The appellant, a hundred percent export-oriented unit (EOU), contends that the impugned products, 'Artesunate' and 'Venlafaxine,' fall under the category of 'bulk drugs' that they are obligated to export. The adjudicating authority's interpretation of the notification led to the recovery order, raising the question of compliance with the law laid down by the Hon'ble Supreme Court in previous cases.

2. The appellant, approved under the FTP scheme, was entitled to duty-free procurement of inputs and capital goods with the obligation to maintain a positive net foreign exchange (NFE). The eligibility for clearances into the domestic market is based on the FOB value of exports exceeding imported inputs consumed during the year. The notification under scrutiny scaled down the levy on goods cleared by EOU units, subject to certain conditions and thresholds set by the Development Commissioner.

3. The dispute involves the interpretation of paragraph 6.8 of the FTP, specifically the conditions regarding the sale of products similar to exported goods. The controversy arises from changes in the entitlement percentages over different FTP periods. The impugned order restricted the clearance entitlement of 'Artesunate' and denied clearance for 'Venlafaxine' based on these restrictions, leading to differential duty liabilities.

4. The legal aspect of strict interpretation is crucial in this case, given the special provisions and higher duty liabilities imposed on EOU units under the Central Excise Act. The appellant argues compliance with the notification's terms, citing various legal precedents supporting their interpretation. The issue of jurisdictional competence of the Development Commissioner is also raised in the context of approvals granted for clearances.

5. The Tribunal's decision focuses on the computation of sale entitlement and the jurisdictional competence of customs authorities. The lack of clarity in the impugned order regarding the distinction between 'goods' and 'products' under different statutory enactments highlights the need for a fresh decision based on proper interpretation and reference to relevant authorities.

6. Ultimately, the Tribunal sets aside the impugned order, remanding the matter back to the adjudicating authority for a fresh decision based on a more comprehensive understanding of the legal provisions and contextual interpretation of the FTP notification.