M/S. L. R. BROTHERS INDO FLORA LIMITED Vs. COMMISSIONER OF CENTRAL EXCISE
SUPREME COURT OF INDIA
M/S. L. R. Brothers Indo Flora Limited
COMMISSIONER OF CENTRAL EXCISE
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A.M.KHANWILKAR, J. -
(1.)This appeal takes exception to the Final Order No. C/203/08 dated 17.7.2008 passed by the Customs, Excise and Service Tax Appellate Tribunal in Customs Appeal No. 9 of 2008, whereby the customs duty levied upon the appellant on the sale of cut flowers within the Domestic Tariff Area had been confirmed by the Tribunal.
1 For short, "CESTAT"
2 For short, "DTA"
(2.)The factual matrix leading to the present appeal is that the appellant - M/s. L.R. Brothers Indo Flora Ltd. is a 100% Export Oriented Unit and engaged in production of cut flowers and flower buds of all kinds, suitable for bouquets and for ornamental purposes. The 100% EOU is required to export all articles produced by it. As a consequence whereof, it is exempted from payment of customs duty on the imported inputs used during production of the exported articles, vide Notification No. 126/94-Cus dated 3.6.1994. Under the said notification, exemption on levy of customs duty had been extended even to the inputs used in production of articles sold in domestic market, in accordance with the Export-Import (EXIM) Policy and subject to other conditions specified by the Development Commissioner. To wit, upon payment of excise duty in case of excisable goods; and in case of non-excisable goods, upon payment of customs duty on the inputs used for production, manufacturing or packaging of such articles at a rate equivalent to the rate of customs duty that would have been leviable on such articles, if such articles were imported. The said notification was amended by Notification No. 56/01-Cus dated 18.5.2001, by which the customs duty in case of non-excisable goods became leviable on inputs used for production, manufacturing or packaging, as if there was no exemption notification in place. The effect of this amendment was that the customs duty on inputs which was charged at the rate equivalent to the duty leviable on final articles under the exemption notification, was now chargeable at the rate specified for the inputs.
 For short, "EOU"
 For short, "the exemption notification"
 For short, "the amendment notification"
(3.)The EXIM Policy 1997-2002 provided that a 100% EOU in floriculture sector was permitted to sell 50% of its produce in DTA, subject to achieving positive net foreign exchange earning of 20% and upon approval of the Development Commissioner. The appellant, without obtaining the approval of the Development Commissioner and without maintaining the requisite net foreign exchange earning, made DTA sales to the extent of Rs.38,40,537/- during 1998-99 to 2000-01 (upto December 2000), in contravention of the provisions of EXIM Policy. Notably, the appellant subsequently sought ex-post facto approval from the Development Commissioner vide letter dated 6.2.2001.
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