2019 (2) TMI 1186 – CESTAT CHENNAI – TMI – 100% EOU – Benefit of concessional rate of duty as per N/N. 23/2003-CE dated 31.3.2003 – Valuation of DTA Clearances – precision automotive components, ancillaries, turbo chargers and parts thereof, casting and tools, dies and moulds, jigs and fixtures – similar goods – It appeared to the Department that value of DTA clearances of bearing housing machined (parts of turbo charger) is more than the prescribed limit of 90% of the FOB value of exports – N/N. 23/2003-CE dated 31.3.2003 vide Sl. No. 3.
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Held that:- Within entitlement of DTA sale, unit may sell in DTA, its products similar to goods which are exported or expected to be exported from units. The description of goods in the Green card does not differentiate or specify goods on the basis of Customs Tariff. It merely treats them belonging to a class. Bearing machines are considered by department as part of Turbo Charger which are parts of automobile, then Precision Automotive Compone
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(Judicial) And Hon ble Shri Madhu Mohan Damodhar, Member (Technical) Shri S. Murugappan, Advocate for the Appellant Ms. T. Usha Devi, DC (AR) for the Respondent ORDER Per Bench The facts of the appeal are that the appellants M/s. ABI Showatech India Ltd. are 100% EOU with green card for manufacture and export of precision automotive components, ancillaries, turbo chargers and parts thereof, casting and tools, dies and moulds, jigs and fixtures. The appellants exported some quantity of bearing housings and large quantity of precision automotive components (cylinders). In DTA, they cleared large quantity of bearing housing. On scrutiny of records, it appeared to the department that in terms of para 6.8(a) of Foreign Trade Policy 2009 – 2014, the units other than gems and jewellery units, may sell goods upto 50% of FOB value of exports subject to fulfillment of positive NFE on payment of concessional duties. Within this entitlement of DTA sale, a unit may sell in DTA, its products simila
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leared bearing housing machined into DTA at concessional rate of duties in excess of their entitlement in terms of para 6.8(a) of FTP 2009 – 2014 and in contravention of the conditions stipulated in Sl. No. 3 of Notification 23/2003-CE dated 31.3.2003. Hence, show cause notice was issued to the appellant inter alia proposing differential duty of ₹ 62,51,633/- with interest thereon on the value of clearances of bearing house machined (parts of turbo charger) into DTA for the period from April 2009 to March 2010. In addition, the Commissioner vide the impugned order dated 31.3.2011 confirmed the proposed demand with interest and also imposed penalty under Rule 25(1) of the Central Excise Rules, 2002. Hence this appeal. 3. When the matter came up for hearing, ld. counsel Shri S. Murugappan made oral and written submissions which can be broadly summarized as under:- 3.1 There is no distinction between turbo charger components or precision automotive components in the green card. Henc
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ns. Hence, imposition of equal penalty under Rule 25(1) cannot be sustained. 4. On the other hand, ld. AR Ms. T. Usha Devi supports the findings in the impugned order. She pointed out that the appellant have made one export of 50 numbers of bearing house machined for the FOB value of ₹ 25,135/- during the impugned period. Hence accrual of the DTA entitlement that could have happened through the physical exports of the said bearing housing would be only 90% of such FOB value and not the combined FOB value of exports for both the products. 5. Heard both sides. 6.1 The first allegation is that Bearing Housing and Precision Automotive components are not similar goods within the meaning of para 6.8(a) of Foreign Trade Policy 2009 -2014 so as to allow the benefit of Notification No.23/2003-CE dated 31.3.2003 vide Sl. No. 3 of the Notification. In para 9(a) of the impugned order, the adjudicating authority has observed that it may be a fact that Bearing Housing Machine and Precision Aut
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ry units, may sell goods upto 50% of FOB value of exports, subject to fulfillment of positive NFE, on payment of concessional duties. Within entitlement of DTA sale, unit may sell in DTA, its products similar to goods which are exported or expected to be exported from units. However, units which are manufacturing and exporting more than one product can sell any of these products in to DTA, upto 90% of FOB value of export of the specific products, subject to the condition that total DTA sale does not exceed the overall entitlement of 50% of FOB value of exports for the unit as stipulated above. 6.2 Thus, it can be seen that within entitlement of DTA sale, unit may sell in DTA, its products similar to goods which are exported or expected to be exported from units. The description of goods in the Green card does not differentiate or specify goods on the basis of Customs Tariff. It merely treats them belonging to a class. Bearing machines are considered by department as part of Turbo Charg
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