A DIVISION BENCH OF THE SUPREME COURT HELD THAT THE EXIM POLICY 1997 2002 (EXPORT IMPORT POLICY) 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 EARNING OF 20% AND UPON APPROVAL OF THE DEVELOPMENT COMMISSIONER AND FAILURE TO DO SO ENTITLE THE CUSTOM AUTHORITIES TO INVOKE PROVISIONS OF SECTION 28 OF THE CUSTOM ACT 1962.

NAME		MOBILE NO.	E-MAIL I’D
RANJEET KUMAR		8383098478, 9667769795	rk@courtkutchehry.com
JAI THAKUR		8130703334, 9355723300	jai.thakur@courtkutchehry.com
RAJEEV RANJAN		9334553249	rajiv.ranjan@courtkutchehry.com
ASHOK MISHRA		9718327746	sales@courtkutchehry.com
RAVI KUMAR			ravi.singh@courtkutchehry.com

M/S. L. R. Brothers Indo Flora Ltd Vs. Commissioner Of Central Excise, (2020) 09 SC CK 0003

 A Division Bench of the Supreme Court while dismissing an appeal filed against the final order passed by the Customs, Excise & Service Tax Appellate Tribunal [For short, “CESTAT”] 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 Area [For short, “DTA”] had been confirmed by the Tribunal, held that the Exim Policy 1997 2002  (Export Import Policy) 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 earning of 20% and upon approval of the Development Commissioner and failure to do so entitle the custom authorities to invoke provisions of section 28 of the custom act 1962. The Division Bench stated that in the fact situation of the present case, the appellant was issued a show cause notice mentioning that it had suppressed the DTA sales of cut flowers to evade payment of duty. Had the appellant in good faith believed that no duty was payable upon the DTA sales of cut flowers, it would have sought prior approval of the Development Commissioner, which it failed to do. Even in the letter seeking ex post facto approval, the appellant claimed that they had not used any imported input such as fertilizer, plant growth regulations, etc. in growing flowers sold in DTA, despite having imported green house equipment, raw materials like Live Rose Plants and consumables like planting materials and fertilizers. Therefore, it prima facie appeared that suppression by the appellant was “wilful”. The burden of proving to the contrary rested upon the appellant, which the appellant failed to discharge by failing to establish that the imported inputs were not used in the production of the cut flowers sold in DTA. In view thereof, the authorities below have rightly invoked Section 28 of the 1962 Act and allied provisions. Hence CESTAT has rightly upheld the levy of customs duty.