LexCOMMISSIONER OF CENTRAL EXCISE versus M/S NESTLE INDIA LIMITED
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
[2015] 12 S.C.R. 222 A COMMISSIONER OF CENTRAL EXCISE B v. M/S NESTLE INDIA LIMITED (Civil Appeal No. 951 of 2008) NOVEMBER 24, 2015 [A. K. SIKRI AND R. F. NARIMAN, JJ.) Central Excise Valuation (Determination of Price of c Excisable Goods) Rules, 2000: r.8 - Clearance of product manufactured out of indigenous raw materials to sister units on payment of duty in terms of Notification no.8197 and 231 2003 by assessee, a 100% EOU - Basis of valuation whether FOB value of export of similar goods or cost of production u/ O r. 8 of rules - Held: Since the exemption notifications are applicable and since what has to be determined under the said notifications is excise duty payable in India, such duty could only be arrived at by applying r.8 in cases of captive consumption- Central Excise Act, 1944-s.3(1) proviso (ii). E Dismissing the appeal, the Court HELD: 1. Section 5A under which the relevant exemption notifications were issued states in the proviso F that no exemption shall apply to excisable goods which are produced or manufactured by a 100% Export Oriented Undertaking and brought to any place in India unless specifically provided in such exemption notification. In notification no.8/97 dated 1.3.1997, there . G is specific provision for exemption of certain goods produced in a 100% EOU wholly from raw materials produced or manufactured in India. It is not disputed by the revenue that the instant tea manufactured by the respondent would be covered being a finished product H specified in the schedule to the Central Excise Tariff Act. 222 COMMISSIONER OF CENTRAL EXCISE v. M/S NESTLE 223 INDIA LIMITED Further, the notification goes on to state that the said A tea should be "allowed to be sold" in India in accordance with the relevant EXIM policy. It further goes on to state that the exemption from payment of the duty of excise that is leviable thereunder under Section 3 is what is payable in excess of an amount equal to the duty of B excise leviable on like goods produced or manufactured · • in India produced in an undertaking other than in a 100% Export Oriented Undertaking, if sold in India. It is clear that the object of the notification is that so far as the product in question is concerned, so long as it is C manufactured by a 100% EOU out of wholly indigenous raw materials and so long as it is allowed to be sold in India, the duty payable should only be the duty of excise that is payable on like goods manufactured or produced 0 and sold in India by undertakings which are not 100% EOUs~ [Para 14-15] [230-G-H; 231-A-E] 2. There is no doubt whatsoever that the duty of excise leviable under Section 3 would be on the basis of the value of like goods produced or manufactured E outside India as determinable in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975. However, the notification states that duty calculated on the said basis would only be payable to F the extent of like goods manufactured in India by persons other than 100% EOUs. This being the case, it is clear that in the absence of actual sales in the wholesale market, when goods are captively consu~ed and not sold, Rule 8 of the Central Excise Rules would have to G . be followed to determine what would be the amount equal to the duty of excise leviable on like goods. On the facts of the present case, it is clear that the said duty of excise arrived at based on Section 3(1) Proviso (ii) is more than the duty determinable for like goods produced H 224 SUPREME COURT REPORTS [2015] 12 S.C.R. A or manufactured in India in other than 100% EOUs. Since the notification exempts anything that is in excess of what is determined as excise duty on such like goods, and considering that for the entire period under question the duty arrived at under Section 3(1) proviso (ii) is in excess B of the duty arrived at on like goods manufactured in India by non 100% EOUs, it is clear that the whole basis of the show cause notice is indeed flawed. Further, the show cause notice is based on one solitary circumstance - the fact that goods captively consumed by the two sister C units of the unit in question are not "sold". This approach flies in the face of the language of the notification dated 1.3.1997. The test to be applied under the said notification is whether the goods in question 0 are "allowed to be sold" in India. The aforesaid expression is obviously d
Excerpt shown. Read the full judgment & AI analysis in Lexace.