Summary
The Court upheld customs duty on imported inputs used by a floriculture export-oriented unit for cut flowers sold domestically in breach of export-policy conditions. The earlier exemption notification measured the input-duty liability by the duty on the finished articles as if imported; it did not tax home-grown flowers as imports. The 2001 change to actual input-duty calculation was a substantive prospective concession. Wilful suppression on the record justified the extended limitation period.
Issues
- Whether the customs demand concerned imported inputs or impermissibly taxed domestically grown flowers.
- Whether the May 2001 amendment applied retrospectively to earlier domestic sales.
- Whether the extended limitation period was justified.
Provisions considered
- Section 12, Customs Act, 1962Read with the exemption notification to sustain duty on imported inputs at the prescribed measure. (¶¶ 16, 17, 18, 20, 22)
- Paragraph 3, Notification No. 126/94-Cus dated 3 June 1994Applied the historical method quantifying duty on inputs by reference to finished articles as if imported. (¶¶ 11, 12, 13, 16, 17, 18, 20)
- Amendment of paragraph 3 of Notification No. 126/94-Cus, Notification No. 56/2001-Cus dated 18 May 2001Held the substitution of actual input-duty calculation prospective. (¶¶ 23, 24, 25, 26, 27, 28, 29, 30, 31, 32)
Held
- Compliance with the export-policy conditions, including the prescribed foreign-exchange earnings and approval, was a prerequisite to the domestic-sale entitlement. The appellant had not fulfilled those conditions and could not claim the exemption on that basis. (¶¶ 11, 12, 13, 14, 15, 32)
- For the non-excisable flowers, the demand under the Customs Act was for duty on imported inputs. Treating the flowers as if imported supplied the prescribed quantification measure, rather than imposing customs duty on the domestically grown flowers themselves. Authorities addressing excisable domestic clearances did not govern this demand. (¶¶ 16, 17, 18, 19, 20, 21, 22)
- The May 2001 amendment changed the prescribed duty calculation prospectively. The previous text was clear and reflected a deliberate arrangement; correcting a disadvantage relative to domestic units did not make the change merely clarificatory or establish retrospective intent. The subsequent circular did not undo accrued liabilities. (¶¶ 23, 24, 25, 26, 27, 28, 29, 30, 31, 32)
- Extended limitation requires deliberate default, not mere inadvertent non-payment. Here the notice specifically alleged suppression, no prior domestic-sale approval had been sought, and the later denial of imported-input use was not substantiated despite recorded imports. The invocation of Section 28 and allied provisions was sustained on these facts. (¶¶ 33, 34)
Result
Appeal dismissed; CESTAT’s confirmation of the customs levy upheld. No order as to costs; pending applications disposed of.