M/S. VIRLON TEXTILE MILLS LTD. versus COMMISSIONER OF CENTRAL EXCISE, MUMBAI

M/S. VIRLON TEXTILE MILLS LTD. versus COMMISSIONER OF CENTRAL EXCISE, MUMBAI

DTA sales against foreign exchange by 100% EOUs prior to 11.5.2001 must be treated as 'allowed to be sold in India' and are entitled to exemption under Notification No. 2/95-CE. There is no basis in policy or notification text for limiting this benefit to 50% of such sales. The Tribunal's interpretation to restrict the exemption was erroneous and the matter must be remanded for fresh calculation of duty in accordance with this interpretation.

Parties
Appellant: MIS. VIRLON TEXTILE MILLS LTD.; Respondent: COMMISSIONER OF CENTRAL EXCISE, MUMBAI
Jurisdiction
India
Judgment Date
17 April 2007
Procedural Posture
Civil Appeal / Supreme Court Final Judgment
Outcome
Appellant's appeal allowed; Respondent's appeal dismissed
Legal Topics
Export Oriented Unit (eou), Levy of Duties, Exemption Notifications, Export and Import Policy (exim Policy), Domestic Tariff Area (dta) Sales
Customs Law Excise Law Export Oriented Unit (eou) Levy of Duties Exemption Notifications Export and Import Policy (exim Policy) Domestic Tariff Area (dta) Sales

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Parties

MIS. VIRLON TEXTILE MILLS LTD.

Appellant

COMMISSIONER OF CENTRAL EXCISE, MUMBAI

Respondent

Procedural Posture

Civil Appeal / Supreme Court Final Judgment

Legal Issues

  1. 1 Whether DTA sales against foreign exchange by a 100% EOU are entitled to the benefit of Notification No. 2/95-CE under the Exim Policy prior to 11.5.2001
  2. 2 Whether the Tribunal was correct in limiting the benefit of exemption under Notification No. 2/95-CE to 50% of DTA sales against foreign exchange

Ratio Decidendi

DTA sales against foreign exchange by 100% EOUs prior to 11.5.2001 must be treated as 'allowed to be sold in India' and are entitled to exemption under Notification No. 2/95-CE. There is no basis in policy or notification text for limiting this benefit to 50% of such sales. The Tribunal's interpretation to restrict the exemption was erroneous and the matter must be remanded for fresh calculation of duty in accordance with this interpretation.

Court Disposition

Appellant's appeal allowed; Respondent's appeal dismissed

Orders

  • Impugned judgment of Tribunal set aside
  • Matter remanded to Commissioner for calculation of duties payable by assessee in terms of Notification No. 2/95-CE, as interpreted by the Supreme Court