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PJ/Case Laws/2012-13/1042

Benefit of DTA sale - denial of on ground of clearing of different goods-whether justifiable?

Case: SURYAVANSHI SPINNING MILLS LTD. versus COMMISSIONER OF C. EX., BHOPAL
 
Citation: 2007 (207) E.L.T. 532 (Tri. - Del.)
 
Issue:- Clearance of different goods by EOU in DTA than what was exported in the current year – whether denial of benefit justifiable as DTA sale was allowed on the basis of preceding year’s performance – stay granted.
 
Brief Facts:- The applicants have filed an appeal against the order of Commissioner (Appeals) made on 3-5-2006 which has denied the availment of DTA benefits to the appellant on the plea that the item sold in the DTA was “synthetic yarn” whereas the permission was granted for “cotton yarn and synthetic yarn”. They had obtained DTA sale permission from the Development Commissioner for the sale of “cotton yarn and synthetic yarn” on the basis of export made by them during the previous year (i.e. January 2002 to March 2002). In the conditions, it was stipulated that DTA sale will be admissible only to “similar goods or which belonged to the same class as that of goods manufactured and exported”.
 
In the impugned order the Commissioner (Appeals) has gone by the criterion of raw material used in the “synthetic yarn” which is admittedly not a condition prescribed in the permission letter from the Development Commissioner.
 
Appellant’s Contention:- Appellant contended that DTA sale by an EOU is an entitlement which accrues to an EOU on the basis of the preceding year’s performance on achievement of prescribed NFEP. Therefore, the ‘goods exported’ relates to the preceding year and not to the year of sale. In support of this, argument, they relied on Tribunal’s decision in the case of Commissioner of Central Excise, Hyderabad v. Sanghi Spinners (I) Ltd wherein the Tribunal has endorsed the views of the Commissioner, which were contested by the Revenue.
 
Respondent’s Contention:- Revenue reiterated that the item cleared in DTA was not the same as the one exported mainly in view of its composition.
 
Reasoning of Judgment:- The Tribunal noted that the Revenue has failed to produce the opinion/contention of the learned Development Commissioner obtained in regard to non-clearance of same product in DTA as envisaged in various CBEC circulars.
 
The Tribunal found that the applicant has made out a prima facie case in his favour for total waiver of duty demanded under the impugned order. Interim stay is, therefore, granted without any condition of pre-deposit of duty and penalty. The penalty imposed on the General Manager is also waived for the same reasons till the matter is taken up for final hearing.
 
Decision:- Stay Granted.
 
Comment:- This decision is of stay application and not a final decision but the ratio decindi of this verdict is clearly says that the permission is granted on the basis of last year turnover then the clearance of goods similar to that of last year clearances should be taken. 

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