NDLI: M/s. L. R. Brothers Indo Flora Ltd. Vs. Commissioner of Central Excise

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Custom Duty Customs Act 1962 Floriculture
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Central Excise Act, 1944 (1 of 1944) Customs Act, 1962 (52 of 1962)
Case(s) Referred	Referred Case 0 Referred Case 1 Referred Case 2 Referred Case 3 Referred Case 4
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Dismissed
Headnote	Customs Act, 1962 – Central Excise Act, 1944 – s.3 –Appellant, a 100% Export Oriented Unit (EOU) was engaged inproduction of cut flowers and flower buds – The 100% EOU isrequired to export all articles produced by it and was exemptedfrom payment of customs duty on the imported inputs used duringproduction of the exported articles vide exemption notification dated03.06.1994 – Under the said notification, exemption on levy ofcustoms duty was extended even to the inputs used in production ofarticles sold in domestic market – Thereafter, came amendednotification dated 18.05.2001, by which the customs duty in caseof non-excisable goods became leviable on inputs used forproduction, manufacturing or packaging, as if there was noexemption notification in place – The EXIM Policy 1997-2002provided that a 100% EOU in floriculture sector was permitted tosell 50% of its produce in Domestic Tariff Area (DTA), subject toachieving positive net foreign exchange earning of 20% and uponthe approval of the Development Commissioner – The appellantwithout obtaining the approval of the Development Commissionerand without maintaining the requisite net foreign exchange earningmade DTA sales during 1998-99 to 2000-01 in contravention of theEXIM Policy – However, the appellant subsequently sought ex-postfacto approval from Development Commissioner – The AdditionalCommissioner, Central Excise issued a show cause notice as to whycustoms duty, interest and penalty should not be imposed for theDTA sales made by the appellant in contravention of the EXIM Policy,that too after having availed exemptions under the exemptionnotification – The Additional Commissioner adjudged the showcause notice and held that the DTA sales were made withoutpermission and in contravention of the EXIM Policy and therefore,customs duty is leviable upon the appellant for the said sales – TheAppeal before the Commissioner was unsuccessful – In a furtherappeal before CESTAT, the order of the authorities below wereconfirmed – The Supreme Court framed two questions: (i) Whethercustoms duty can be charged on the non-excisable goods producedin India and sold in DTA by an EOU ?; and (ii) Whether theamendment notification dated 18.05.2001, purporting to amend thecriteria for determination of duty on inputs, is prospective orretrospective in its application ? – Held: The DTA sales pertainingto excisable goods made in conformity with the conditions of theEXIM policy are exigible to excise duty, but once there iscontravention of the condition(s) of the EXIM policy, irrespectiveof the goods produced being excisable or non-excisable, the benefitunder the exemption notification is unavailable – In such a situation,the very goods would become liable to imposition of customs dutyas if being imported goods – So, the demand in the present case,pertaining to the non-excisable goods (cut flowers) has rightly beenmade under the 1962 Act upon the imported inputs used in theproduction of goods sold in DTA in violation of condition(s) in theEXIM Policy – So far as the amendment notification is concerned,it is a settled proposition of law that all laws are deemed to applyprospectively unless either expressly specified to applyretrospectively or intended to have been done so by the legislature– An essential requirement for application of a legislationretrospectively is to show that the previous legislation had anyomission or ambiguity or it was intended to explain an earlier act –In absence of the above ingredients, a legislation cannot be regardedas having retrospective effect – In the instant case, the amendmentnotification was not in clarificatory nature – Further, any ambiguityin regard to the date of application of the amendment thereto wouldnecessarily have to be construed in favour of the State, unless shownotherwise by judicially acceptable parameters – Therefore, CESTAThas rightly upheld the levy of customs duty.
Judge	Hon'ble Mr. Justice A.M. Khanwilkar
Neutral Citation	2020 INSC 525
Petitioner	M/s. L. R. Brothers Indo Flora Ltd.
Respondent	Commissioner Of Central Excise
SCR	[2020] 10 S.C.R. 1043
Judgement Date	2020-09-01
Case Number	7157

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