Hon'ble Judges/Coram:
A.M. Khanwilkar and Dinesh Maheshwari

JUDGMENT

A.M. Khanwilkar, J.

1. This appeal takes exception to the Final Order No. C/203/08 dated 17.7.2008 passed by the Customs, Excise & Service Tax Appellate Tribunal¹ in Customs Appeal No. 9 of 2008, whereby the customs duty levied upon the Appellant on the sale of cut flowers within the Domestic Tariff Area² had been confirmed by the Tribunal.

2. The factual matrix leading to the present appeal is that the Appellant-M/s. L.R. Brothers Indo Flora Ltd. is a 100% Export Oriented Unit³ and engaged in production of cut flowers and flower buds of all kinds, suitable for bouquets and for ornamental purposes. The 100% EOU is required to export all articles produced by it. As a consequence whereof, it is exempted from payment of customs duty on the imported inputs used during production of the exported articles, vide Notification No. 126/94-Cus dated 3.6.1994⁴. Under the said notification, exemption on levy of customs duty had been extended even to the inputs used in production of articles sold in domestic market, in accordance with the Export-Import (EXIM) Policy and subject to other conditions specified by the Development Commissioner. To wit, upon payment of excise duty in case of excisable goods; and in case of non-excisable goods, upon payment of customs duty on the inputs used for production, manufacturing or packaging of such articles at a rate equivalent to the rate of customs duty that would have been leviable on such articles, if such articles were imported. The said notification was amended by Notification No. 56/01-Cus dated 18.5.2001⁵, by which the customs duty in case of non-excisable goods became leviable on inputs used for production, manufacturing or packaging, as if there was no exemption notification in place. The effect of this amendment was that the customs duty on inputs which was charged at the rate equivalent to the duty leviable on final articles under the exemption notification, was now chargeable at the rate specified for the inputs.

3. The EXIM Policy 1997-2002 provided that a 100% EOU in floriculture sector was permitted to sell 50% of its produce in DTA, subject to achieving positive net foreign exchange........