(Per : HONOURABLE MR.JUSTICE AKIL KURESHI) Department is in appeal against the judgment of the Tribunal dated 10.11.09 raising following questions for our consideration:
"(a) Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in passing non-speaking order by not recording and giving finding on submissions made on behalf of the appellant by learned SDR at the hearing of the appeal before the Tribunal?
(b) Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in allowing appeal of the respondent by applying decision cited in the impugned order, without recording and giving finding on comparative facts of the case of cited decision and case of the respondent ?"
Though we find that the decision of the Tribunal is rather short, we have with the assistance of the learned counsel appearing for the parties gathered the facts from the record. We might have been tempted to request the Tribunal to give the background facts and discussion of the issue presented before it and for that purpose remand the proceedings, however, since we find that the issue is squarely covered by a decision of the Apex Court, we refrain from adopting such a course.
The Commissioner had confirmed the duty demand against the respondent principally finding that the DTA sales made by the respondents cannot be equated with actual exports. In this regard, the Commissioner made the following observations :
"The total quantity cleared under Notification No.2/95 during the period from Sept.1999 to April 2000 found to be 35474/50 kgs. valued at Rs.37,22,413/- on which they had paid appropriate duty. The appellants do not have any other documentary evidences, except the invoices and computerized datewise packed yarn stock to prove their contention that the goods cleared under Notification No.8/97 has been manufactured from indigenous raw materials only. Simultaneously, there is nothing on record to prove that the goods cleared Under Notification No.8/97 have been manufactured by using any imported raw material. Moreover, on perusal of the impugned show cause notice dated 05.05.2000, it is noticed that no where there is any mention of Notification No.8/07 and 2/95. Therefore, considering the fact that whatever documents produced by the appellants are true and sufficient, I find that they are eligible for exemption under Notification No.8/97 and the appellants have availed the same. But the present demand is for excess value of cotton yarn cleared in DTA sales as compared with the permissible entitlement i.e. 50% of FOB value of export as allowed in para 9.9(b) of the EXIM policy 1997-2002, as amended vide amendment dated 31.03.1999."
This appears to be the sole controversy between the parties. When the matter went upto the Tribunal, the Tribunal allowed the respondent's appeal primarily observing that the Apex Court in the case of Virlon Textile Mills Ltd v. Commissioner of C.Ex., 2007 (211) ELT 353 (SC) has held that for the purpose of calculating eligible quantity that can be cleared to DTA under notification No.2/95, DTA sales against foreign exchange are also required to be taken into account. The Tribunal also referred to the decision in the case of Ginni International rendered by the Tribunal against which the Apex Court had dismissed the appeal of the Revenue.
Counsel for the respondent further clarified that authorities had granted clearance at concessional duty against deemed exports made by the respondent. We find that the Apex Court in the case of Virlon Textiles Mills Ltd (supra) had expressed the following view:
"7. For the following reasons, we find merit in this civil appeal. Firstly, on examination of the Exim Policy we find that the said Policy as a rule stated that every 100% EOU was obliged to manufacture or produce from duty free imported raw materials capital goods etc., finished products/ articles and as a rule every 100% EOU was obliged to export its entire production and earn foreign exchange. This was what was called as Physical Exports. However, this rule had certain exceptions. In this civil appeal, we are concerned with DTA sales. As an exception, there existed two types of DTA sales under the said Policy, namely, DTA sales against rupee and DTA sales against foreign exchange which was similar to physical exports. This latter category was known as "Other Supplies in DTA". Therefore, to put it in brief, "Other Supplies in DTA" was equated with physical exports which, as stated above, was the general rule for 100% EOU. In other words, the general rule was physical exports and other supplies in DTA was equated to physical exports. This equation was necessary because other supplies in DTA gave certain benefits to the economy like preservation of foreign exchange, import substitution, savings of transportation costs and to provide competitiveness and level-playing field for Indian exporters. According to the Revenue, the expression occurring in the second proviso to Section 3(1), namely, "allowed to be sold in India" was applicable only to DTA sales against rupee and not DTA sale against foreign exchange. In this civil appeal, we are concerned with the law as it stood prior to 11.5.2001. In our view, DTA sale against foreign exchange was covered by the expression "allowed to be sold in India" and, therefore, such sale fell under the proviso to Section 3(1) of the 1944 Act. In the circumstances, the duty liability of the assessee (appellant herein) was required to be determined after allowing to it the benefit of notification No. 2/95-CE. That notification granted partial exemption to the assessee from duties in respect of goods manufactured in 100% EOU and allowed to be sold in India under para 9.9 (a), (b), (c) and (d). Once DTA sales against foreign exchange are held to be covered by the proviso to Section 3(1) of the 1944 Act then the whole difference between DTA sales against rupee and DTA sales against foreign exchange, for the purposes of notification No. 2/95-CE would stand eliminated. This would be, however, subject to the compliance of other conditions of notification No. 2/95-CE. Therefore, in our view, the Tribunal had erred in relying on para 9.9(b) for limiting the benefits of exemption under notification No. 2/95-CE by imposing a new condition to the effect that the benefits would be admissible only in respect of 50% of such DTA sales against foreign exchange. Secondly, once the permission was granted by the competent authority under the Exim Policy to make DTA sales against foreign exchange, the assessee (appellant herein) was entitled to the benefit of concessional rate of duty under notification no.2/95-CE. If DTA sales against rupee were allowed the benefit of notification No. 2/95-CE, then DTA supplies against foreign exchange, which were at par with physical exports, cannot be denied the same benefits and they cannot be subjected to a higher duty. Thirdly, once DTA sales against foreign exchange are covered by the above expression "allowed to be sold in India", all issues relating to calculation of the duty payable in terms of notification No. 2/95-CE will have to be decided afresh by the adjudicating authority and accordingly, we hereby remand the matter back to the Commissioner for calculating the duties payable by the assessee in terms of notification No. 2/95. The Commissioner will calculate the duties accordingly as hereinabove mentioned. Lastly, we are of the view that there is no fundamental difference, as far as the exemption notification No. 2/95-CE is concerned, between DTA sales against foreign exchange and DTA sales against rupee. Once DTA sales against foreign exchange fall within the expression "allowed to be sold in India", the Department cannot deny to such sales the exemption under notification no. 2/95-CE, since DTA sales against foreign exchange will come under para 9.9. According to the Tribunal, the entire supply to DTA against foreign exchange was not entitled to the benefit of notification No. 2/95-CE but only 50% of the supply was eligible for the said relief. We do not see any basis for introduction of this condition in notification No. 2/95-CE. It appears that this condition is brought in on the ground that para 9.9 (b) refers to DTA sales up to 50% of the FOB value of exports. In our view, the Tribunal had erred in relying on the said para 9.9 (b) for limiting the benefits of exemption under notification No. 2/95-CE in respect of 50% of DTA sales (supplies) against foreign exchange. One cannot ignore the fact that DTA sales in foreign exchange provides for better money value as compared to DTA sales in rupee. Therefore, if DTA sales against rupee are allowed the benefits of notification No.2/95-CE, DTA supplies, which are at par with physical exports, cannot be denied the same benefits."
The issue being the same, we have no hesitation in upholding the Tribunal's judgment. Tax Appeal is therefore, dismissed.
(Akil Kureshi J.) (Ms.Sonia Gokani, J.) (vjn) Top