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 Area had been confirmed by the Tribunal.

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7157 OF 2008
M/s. L. R. Brothers Indo Flora Ltd. … Appellant
Versus
Commissioner of Central Excise …Respondent
J U D G M E N T
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
    1 For short, “CESTAT”
    2 For short, “DTA”
    2
    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 Export­Import (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 non­excisable 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.
    56/01­Cus dated 18.5.20015
    , by which the customs duty in case
    of non­excisable goods became leviable on inputs used for
    3 For short, “EOU”
    4 For short, “the exemption notification”
    5 For short, “the amendment notification”
    3
    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 1997­2002 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. The
    appellant, without obtaining the approval of the Development
    Commissioner and without maintaining the requisite net foreign
    exchange earning, made DTA sales to the extent of
    Rs.38,40,537/­ during 1998­99 to 2000­01 (upto December
    2000), in contravention of the provisions of EXIM Policy. Notably,
    the appellant subsequently sought ex­post facto approval from
    the Development Commissioner vide letter dated 6.2.2001.
  4. Meanwhile, the Additional Commissioner, Central Excise,
    Meerut­I issued a show cause notice dated 16.3.2001 to the
    appellant to show cause as to why customs duty, interest and
    4
    penalty should not be imposed for the DTA sales made by the
    appellant in contravention of the EXIM Policy, that too after
    having availed the exemptions under the exemption notification
    on the import of green house equipment, raw materials like Live
    Rose Plants and consumables like planting materials and
    fertilizers. After according opportunity of being heard, the
    Additional Commissioner adjudged the show cause notice and
    held that the DTA sales were made without permission of the
    Development Commissioner and in contravention of the EXIM
    Policy and therefore, customs duty is leviable upon the appellant
    for the said sales. It was further held that the appellant had
    wilfully suppressed facts and thus Section 28 of the Customs
    Act, 19626
    was invoked in the present case. The relevant extract
    of the Order­in­Original dated 18.10.2001 passed by the
    Additional Commissioner, Central Excise, Meerut – I on the
    aforesaid findings is reproduced hereunder:
    “3.1 I find that the party had imported the capital
    goods and also imported raw materials like “Live
    Rose Plants” and consumable like “Fertilizer and
    Planting Materials” during 1996­97 to 2000­2001 and
    further that they made clearances towards Domestic
    Tariff Area sales without obtaining permission from
    the Competent Authority in the matter. On scrutiny
    of the records, it was observed that before making any
    6 For short, “the 1962 Act”
    5
    DTA sales it was required that 20% positive Net Foreign
    Exchange Earning (NFEP) should have been achieved i.e.
    annual value of export should have been 20% more than
    Rs.2,42,37,400/= (+) annual value of imports of raw
    materials and consumables during the respective year
    and the said noticee had exported the flowers worth
    Rs.91,92,000/= only which are well below prorata
    annual value of Import of capital goods.
    3.2 I also find that as per condition of the approval
    letter No. 119(1994)EOB/34/94 dated 04.5.94, issued by
    Govt. of India, Ministry of Industries, Department of
    Industrial Development, Secretarial for Industrial
    approval, MUCC Section, New Delhi, the bonding period
    of M/s. L.R. Brothers Indo Flora Ltd., was fixed for 10
    years during which they were required to achieve 62%
    value addition over and above the imports and other
    factors contributing towards the foreign exchange gone
    out of the country. As per the specific condition of the
    approval letter, the party was required to export all
    of its production out of India subject to permissible
    limit of Domestic Tariff Area Sales (herein after
    referred to as DTA Sales) and that, too, after specific
    permission from Development Commissioner of the
    EPZ concerned, on payment of applicable Customs &
    Central Excise duties. The Export Import Policy 1997­
    2002 specifies the condition of DTA sales by an EOU.
    In this regard, I reproduce below the contents of
    the relevant paras of Export Import Policy 1997­2002…..
    3.3 Therefore, in view of the above legal provisions of
    the Export Import Policy 1997­2002, it is amply clear
    that for earning DTA sales entitlement the EOU should
    fulfil the export obligations as prescribed in the letter of
    approval and also should have a positive NFEP which is
    20% in case of floriculture units.
    3.4 ….. As per Note 3 to paragraph 9.5 of the Export
    Import Policy, as discussed above, prorata annual value
    of imported capital goods (i.e. 1/5th of the total import of
    Capital Goods worth Rs.12,11,87,000/­ comes to
    Rs.2,42,37,400/­. Therefore, before making any DTA
    sales it was required that 20% positive NFEP should
    have been achieved i.e. the annual value of export should
    have been 20% more than Rs.2,42,37,400/­ + annual
    value of imports of raw materials and consumable during
    the respective year, whereas in all the four years since
    operation, the unit had exported the flowers worth
    Rs.91.92 lakhs only which are well below the prorata
    6
    annual value of import of capital goods. Therefore, in
    view of the specific provisions of the Export Import
    Policy 1997­2002, the unit was not entitled to sell
    any goods in DTA.
    3.5 Moreover, the guidelines for sale of goods in the
    DTA by EOU are prescribed in Appendix 42 of Handbook
    of Procedure, Export Import Policy 1997­2002. Para (f) of
    the said Appendix 42 reads as: “An application for DTA
    sale shall be accompanied by a statement indicating the
    ex­factory value of the goods produced (excluding rejects)
    and ex­factory value of goods actually exported. The
    statement shall be certified by an independent
    cost/chartered/cost and works accountant and endorsed
    by the Customs/Central Excise Officer having
    jurisdiction over the unit. The Development
    commissioner of the EPZ concerned will determine the
    extent of DTA sale admissible in value terms and issue
    goods removal authorization in terms of value and
    quantity for sale in DTA.” However in the present case
    as per records, the party failed to furnish the same
    application as well as permission, if any to this
    department and did not follow the procedure as laid
    down in the Hand Book of Procedure, Export Import
    Policy 1997­2002.
    3.6 Apart from the above, the floriculture EOU may
    Import Capital Goods and Raw Materials, without
    payment of Customs duties in terms of Custom
    Notification No. 126/94 dated 3.6.94 and accordingly
    M/s. L.R. Brother Indo, Flora Ltd., have imported green
    house equipment, raw materials like Liver Rose Plants
    and Consumable like planting materials and Fertilizers
    under the said notification. Para 3 of the said Notification
    reads as under :­ ….
    3.7 Therefore, from the above provision, it is clear
    that the units working under the said Notification may
    sell their produced goods in DTA on payment of excise
    duty as leviable under Section 3 of Central Excise Act,
    1944 if the goods are excisable and on payment of full
    Customs duties leviable on such goods as if imported as
    such if the goods are non excisable. Cut Flowers or
    Flower Buds are not covered under Central Excise Tariff
    Act, 1985 as Chapter 6 which covers such types of
    Flowers in Customs Tariff left blank in Central Excise
    Tariff Act and, therefore, such types of Flowers will be
    treated as non excisable in view of Section 2 (d) of the
    Central Excise Act, 1944. Therefore, full Customs duties
    7
    will be leviable on such Flowers, if sold in DTA treating
    such flowers as imported into India, in terms of
    Notification No. 126/94­Cus dated 03.6.94. Further,
    M/s. L.R. Brothers Indo Flora Ltd., had made DTA sales
    during the year 1998­99 to 2000­01 (upto December
    2000) in contravention to the aforesaid provisions.
    Further, they failed to show any permission from
    Development Commissioner for sale of their goods in
    DTA. It appears that the Development Commissioner
    has granted no such permission to them, as they
    have not earned the DTA sale entitlement due to very
    low exports in comparison to high quantum of
    imports. ……
    3.8 I have also come to conclusion that M/s. L.R.
    Brothers Indo Flora Ltd., Behat Road, Saharanpur have
    contravened the provisions of Import & Export Policy
    1997­2002 and have not fulfilled the conditions of
    Notification No. 126/94 dated 3.6.94. Hence the party is
    liable to pay the full customs duty on cut flowers sold in
    DTA, treating the flowers imported as such into India.
    Further, the said M/s. L.R. Brothers Indo Flora Ltd.,
    have been indulged in wilful suppression of facts, as
    aforesaid, and sold the said goods viz., cut flowers
    falling under Ch. S.H. No. 0603.10 of the Customs
    Tariff, in D.T.A. in contravention of the provisions of
    Import Export Policy 1997­2002, without payment of
    Customs duty, hence extended period of five years as
    provided under proviso to section 28 of the Customs
    Act 1962 is invokable in the instant case. Therefore,
    all obligations were cast on such a large undertaking to
    discharge the correct duty liability i.e. Customs duty
    amounting to Rs.9,98,177.00. Therefore, demand of
    Customs duty stands recoverable from them. They are
    also liable to pay interest @ 24% from the 1st day of the
    month succeeding the month in which the duty ought to
    have been paid under Section 28AB of the Customs Act,
  5. ….”
    (emphasis supplied)
  6. The Additional Commissioner, by way of aforesaid order,
    confirmed the demand of customs duty of Rs.9,98,177/­ under
    Section 28, interest at the rate of 24% under Section 28AB and
    8
    penalty of Rs.9,98,177/­ under Section 114A of the 1962 Act.
    The appellant unsuccessfully carried the matter in appeal before
    the Commissioner (Appeals), Customs & Central Excise, MeerutI, wherein the Order­in­Original came to be confirmed by the
    Order­in­Appeal dated 29.7.2005 by holding thus:
    “5. ……. In the light of the above facts, I find myself
    in agreement with the findings of the adjudicating
    authority that the appellants have not earned the DTA
    sale entitlement due to very low exports in comparison to
    high quantum of imports. Thus, the alleged
    contravention of provisions of Import & Export Policy
    1997­2002 and non­fulfilling of the conditions of the
    Notification 126/94­Cus ibid is fully established against
    them. Therefore, the demand of Customs duty along with
    interest in this case as per the impugned order is
    justified.
    As regards the imposition of penalty on the
    appellants, I find that the charges of contravention of
    provisions of Export & Import Policy 1997­2002 &
    Notification No. 126/94 Cus dt. 03.06.94 stand proved
    against the appellants. They were aware that they were
    not entitled to make DTA sales of the subjected goods,
    even then they made DTA sales of the same to evade
    payment of duty. Hon’ble Supreme Court in the case of
    Gujarat Travancore Agency vs. Commissioner of Income
    Tax 1989 (42) ELT 350 (SC), has held that the penalty
    under Section 271(1)(a) of the Income Tax Act is a civil
    obligation and unless there is something in language of
    the statute indicating the need to establish element of
    mensrea, it is generally sufficient to prove that a default
    in complying with the statute has occurred.
    In view of the ratio of the aforesaid judgment of
    Apex Court, the penalty has been rightly imposed upon
    the appellant.
    In view of the above, I find no infirmity in the
    order passed by the adjudicating authority and therefore
    disallow the appeal.”
    9
  7. The matter was further carried in appeal before CESTAT
    whereat the impugned order was passed confirming the order of
    the authorities below whilst also holding that amendment
    notification is prospective and cannot be applied to the present
    case. The relevant extract of the impugned order is reproduced
    below:
    “5. We have carefully considered the submissions
    made from both the sides. Irrespective of whether the
    DTA clearances of cut­flowers were, in contravention of
    the EXIM Policy or otherwise, the cut­flowers being nonexcisable goods, their DTA clearance would attract, in
    terms of the provisions of para 3(a) of the exemption
    Notification No. 123/94­CUS., only the Custom Duty
    involved on the inputs used in the production of the cutflowers. The point of dispute is as to whether the Custom
    Duty payable on the inputs used in the production of the
    cut­flowers which had been cleared to DTA, is to be
    taken as an amount equal to Custom Duty chargeable on
    the import of cut­flowers, as such, or it should be the
    actual Custom Duty on the inputs used in the
    production of cut­flowers cleared to DTA.
    5.1 xxx xxx xxx
    5.2 From reading of para 3(a) of the Notification No.
    126/94­cus as it existed during the period of dispute i.e.
    during the period prior to 18.5.01 – and as it existed
    during period w.e.f. 18­5­01, it is clear that during the
    period of dispute, the notification contained a machinery
    provisions for determining, the Custom Duty chargeable
    on the inputs used in the production of non­excisable
    goods cleared to DTA and as per this machinery
    provision, the duty was to be in an amount equal to the
    Custom Duty chargeable on the finished goods, as if
    imported, as such. However, after the amendment of this
    Notification w.e.f. 18.5.01, the duty on the inputs used in
    the production of non­excisable goods cleared to the DTA
    was to be calculated on actual basis. The amendment to
    the Notification No. 126/94­CUS. w.e.f. 18.5.01 by the
    Notification No. 56/01 can have only prospective effect
    and it cannot be given retrospective effect. In view of this,
    10
    during the period of dispute, customs duty on the inputs
    used in the production of cut­flowers cleared to DTA has
    to be calculated as per the provisions of the Notification,
    as it existed during that period.
  8. The Tribunal’s judgment in the case of Vikram
    Ispat (supra) is not applicable to the fact of this case, as
    in the present case what is being charged in respect of
    DTA clearances of the cut­flowers is not the customs
    duty on the cut­flowers, but the custom duty on the
    inputs used in the production of those cut­flowers, which
    as per the provisions of Notification, as it existed at that
    time, was equal to the Customs Duty chargeable on the
    import of cut­flowers, as such. In the Tribunal’s
    judgment in case of Zygo Flowers Ltd. (supra) and Cosco
    Blossoms Pvt. Ltd. (supra), the implications of the
    wording of para 3(a) of the exemption notification during
    the period of dispute ­ “or where such articles [including
    rejects, waste and scrap material] are not excisable, on
    payment of Custom Duty on the said goods used for the
    purpose of production, manufacture or packaging of
    such articles in an amount equal to the Custom Duty
    leviable on such articles, as if imported, as such” had not
    been considered. If the Appellant’s view accepted, the
    words “in an amount equal to the Custom Duty leviable
    on such articles, as if imported, as such” would become
    redundant. It is well settled principle of interpretation of
    statute that a statute has to be construed without adding
    any words to it or subtracting any words from it and an
    interpretation which makes a part of the statute
    redundant has to be avoided.
  9. In view of the above discussion, we hold that the
    custom duty has been correctly charged in respect of
    DTA clearances of the cut­flowers and as such we find no
    infirmity in the impugned order. The appeal is
    accordingly dismissed.”
    Thus, the levy of customs duty stood confirmed.
  10. Being aggrieved, the appellant has approached this Court.
    The thrust of the argument of the appellant is that according to
    Paragraph 3 of the exemption notification, sales made in DTA
    would attract excise duty and since the cut flowers sold by the
    11
    appellant are non­excisable goods, no excise duty can be levied
    upon it. Further, according to the notification, in case of nonexcisable goods, the customs duty is leviable on the imported
    inputs. In the present case, since the cut flowers are home
    grown, customs duty cannot be levied upon them and therefore,
    the demand of customs duty cannot be sustained. Reliance is
    placed on the decisions of CESTAT in Cosco Blossoms Pvt. Ltd
    vs. Commissioner of Customs, Delhi7
    and larger bench of
    Central Excise and Gold (Control) Appellate Tribunal8
    in Vikram
    Ispat vs. Commissioner of Central Excise, Mumbai­III9
    . It is
    then urged that the exemption notification predicates levy of
    customs duty on non­excisable goods sold in DTA sales to the
    extent of the value of inputs and not to the extent of the value of
    final product. It is further urged that the amendment notification
    is merely clarificatory and hence it would apply retrospectively.
    To buttress this submission, the appellant had placed reliance on
    Circular No. 31/2001­Cus dated 24.5.2001 issued by Central
    Board of Excise and Customs, New Delhi10, which noted that the
    charge of customs duty on the inputs equal to the duty leviable
    7 2004 (164) ELT 423 (Tri.-Del.)
    8 For short, “the CEGAT”
    9 2000 (120) ELT 800 (Tribunal-LB)
    10 For short, the “CBEC Circular”
    12
    on the import of final product is putting floriculture EOUs at a
    disadvantageous position. The circular further envisages that the
    central excise notifications provided for recovery of duty on
    inputs procured duty free, whereas the exemption notification
    provided for recovery on inputs equal to duty on the final
    product. That the amendment notification was issued to address
    this anomaly and to harmonise the central excise and customs
    notifications. The appellant placed reliance on the Constitution
    Bench decision of this Court in Commissioner of Income Tax
    (Central) – I, New Delhi vs. Vatika Township Private
    Limited11, wherein it had been observed that whenever the
    legislator intends to confer benefit upon a person, it must be
    presumed to have retrospective effect. The appellant relied upon
    yet another decision of this Court in Zile Singh vs. State of
    Haryana & Ors.12 to contend that the substitution of a clause
    which clarifies about the intent of the legislature takes effect from
    the date of enactment of original provision. The appellant would
    further urge that Section 12 of the 1962 Act being the charging
    section, could only be applied if the goods are imported into India
    11 (2015) 1 SCC 1
    12 (2004) 8 SCC 1
    13
    and since the cut flowers are not imported, the show cause notice
    issued under the provisions of the 1962 Act is bad in law. In this
    regard, the appellant had placed reliance on Commissioner of
    Central Excise and Customs vs. Suresh Synthetics13. The
    appellant further relied on the exposition of this Court in
    Uniworth Textiles Limited vs. Commissioner of Central
    Excise, Raipur14 to submit that Section 28 of the 1962 Act,
    extending limitation, can be invoked only in the case of deliberate
    default and urged that it cannot be invoked in the present case
    since there was no default.
  11. Per contra, the respondent would urge that in the fact
    situation of the present case, the department has correctly levied
    the customs duty, as the DTA sales made were in contravention
    of the EXIM policy and the appellant had no permission from the
    Development Commissioner to clear the goods in DTA. The
    respondent further urged that the amendment seeks to bring
    about a substantive change, whilst pointing out that the CBEC
    Circular in its opening paragraph speaks about “carrying out” the
    amendment. Further, the amendment must be applied
    13 2007 (216) ELT 662 (SC)
    14 (2013) 9 SCC 753
    14
    prospectively. Reliance is placed upon the decision of this Court
    in Union of India & Anr. vs. IndusInd Bank Limited & Anr.15
    ,
    wherein it has been held that if the provision is remedial in
    nature, it cannot be construed as clarificatory or declaratory and
    has to be applied prospectively.
  12. We have heard Mr. Rupesh Kumar, learned counsel for the
    appellant and Mr. Ashok K. Srivastava, learned senior counsel for
    the respondent.
  13. The issues that arise for consideration in this appeal are: (i)
    Whether customs duty can be charged on the non­excisable
    goods produced in India and sold in DTA by an EOU?; and (ii)
    Whether the amendment in terms of Notification No. 56/01­Cus
    dated 18.05.2001, purporting to amend the criteria for
    determination of duty on inputs, is prospective or retrospective in
    its application?
  14. At the outset, it is apposite to refer to the stated notification.
    The relevant extract thereof reads as under:
    “NOTIFICATION NO. 126/94­CUS DATED 3.6.1994
    Exemption to import of specified goods for use in
    manufacture of export goods by 100% E.O.Us. ­ In
    exercise of the powers conferred by sub­section (1) of
    section 25 of the Customs Act, 1962 (52 of 1962), the
    15 (2016) 9 SCC 720
    15
    Central Government, being satisfied that it is necessary
    in the public interest so to do, hereby exempts goods
    specified in Annexure­I to this notification (hereinafter
    referred to as the goods), when imported into India, for
    the production or manufacture of articles specified in
    Annexure­II for export out of India or for being used in
    connection with the production, manufacture or
    packaging of the said articles specified in Annexure­II for
    export out of India (hereinafter referred to as the specified
    purpose) by hundred per cent Export Oriented
    Undertakings approved by the Board of Approval for
    hundred per cent Export Oriented Undertakings,
    appointed by the notification of Government of India in
    the former Ministry of Industry and Civil Supplies,
    (Department of Industrial Development) No.
    S.0.163(E)/RLIU/10(2)76, dated the 3rd March, 1976 or
    the Development Commissioner concerned as the case
    may be, from the whole of the duty of customs leviable
    thereon under the First Schedule to the Customs Tariff
    Act, 1975 (51 of 1975) and the additional duty, if any,
    leviable thereon under section 3 of the second mentioned
    Act, subject to the following conditions, namely :­
    (1) the importer has been granted the necessary
    licence for the import of the said goods;
    (2) the importer, at the time of import of the said
    goods, produces to the Assistant Commissioner of
    Customs a certificate from the Development
    Commissioner to the effect that the importer has
    executed a bond in such form and for such sum as
    may be prescribed binding himself­
    (a) to bring the said goods into his unit and to
    use them for the specified purpose; and
    (b) to dispose of the said goods or the articles
    produced, manufactured or packaged in the
    unit or the waste, scrap or remanents arising
    out of such production, manufacture or
    packaging in the manner as may, if any, be
    prescribed in the Export­Import Policy and in
    this notification;…..
    xxx xxx xxx
  15. Notwithstanding anything contained in this
    notification, the exemption contained herein shall also
    apply to the said goods which on importation into India
    are used for the purposes of production, manufacture or
    16
    packaging of articles and such articles (including rejects,
    waste and scrap material arising in the course of
    production, manufacture or packaging of such articles)
    even if not exported out of India are allowed to be sold in
    India under and in accordance with the Export­Import
    Policy and in such quantity and subject to such other
    limitations and conditions as may be specified in this
    behalf by the Development Commissioner, on payment of
    duty of excise leviable thereon under section 3 of the
    Central Excises and Salt Act, 1944 (1 of 1944) or where
    such articles (including rejects, waste and scrap
    material) are not excisable, on payment of customs
    duty on the said goods used for the purpose of
    production, manufacture or packaging of such
    articles, in an amount equal to the customs duty
    leviable on such articles as if imported as such.)
    Explanation.­ For the purposes of this notification,
    “Export­Import Policy” means Export and Import Policy,
    1
    st April, 1997 ­ 31st March, 2002, published by the
    Government of India in the Ministry of Commerce
    Notification No. 1/1997­2002, dated 31st March, 1997, as
    amended from time to time. …..”
    (emphasis supplied)
  16. A bare perusal of the above notification would evince that
    apart from providing for duty free imports of inputs for an 100%
    EOU in order to export all the goods produced or manufactured
    by it, in addition, it also gives liberty to the 100% EOUs to clear
    their goods in DTA to the extent permissible by and in
    accordance with the EXIM policy. The EXIM policy, at paragraph
    9.9 provided that for earning an entitlement to make sales in
    DTA, the unit has to maintain positive net foreign exchange
    earning. The calculation of net foreign exchange earning, as
    defined at paragraph 9.29, is provided for at paragraph 9.5 of the
    17
    Policy, which had to be done as prescribed in Appendix I of the
    Policy. In case of cut flowers, it has been fixed at 20% since it
    would come within the category of “Products not covered above”.
  17. On a combined reading of the notification with the
    conditions laid down in the EXIM policy, it is clear that the
    fulfilment of the aforesaid conditions is a condition precedent to
    become eligible to make DTA sales. Resultantly, if goods are
    cleared in DTA sales in breach of the aforesaid conditions,
    customs duty would be leviable, as if such goods were imported
    goods.
  18. Reverting to the first question, the appellant lays emphasis
    that the DTA sales made by an 100% EOU can only be amenable
    to excise duty and show cause notice under the provisions of the
    1962 Act could not have been issued. This ground finds support
    in the decision of larger bench of the CEGAT in Vikram Ispat
    (supra), which the appellant relies upon. In paragraph 16 of the
    said decision, it has been held as under:
    “16. Notification No. 2/95­C.E., dated 4­1­95
    provides that the goods manufactured and cleared by a
    100% E.O.U. to DTA will be exempted from so much of
    duty of excise as is in excess of the amount calculated at
    the rate of 50% of each of duty of customs leviable read
    with any other notification for the time being in force on
    the like goods produced or manufactured outside India,
    18
    if imported into India provided that the amount of duty
    payable shall not be less than the duty of excise leviable
    on like goods produced or manufactured by the units in
    Domestic Tariff Area read with any relevant notification.
    It is, thus apparent that notification No. 2/95 provides a
    minimum limit of the rate of duty which has to be paid
    by the 100% E.O.U. while clearing the goods to DTA and
    this limit is provided by the duty of excise leviable on like
    good manufactured outside 100% E.O.U. However, if the
    aggregate of duty customs leviable on goods cleared by
    100% E.O.U. is more than the duty of excise leviable on
    like goods, a 100% E.O.U. has to pay more duty. The
    Revenue wants to restrict the availment of Modvat credit
    to the components of additional duty of customs paid
    under Section 3 of the Customs Tariff Act by bringing the
    fiction that 100% E.O.U. is a place which is not in India
    and the sale therefrom within India is akin to import into
    India. We do not find any substance in this view of the
    Revenue. The clearance of the goods by 100% E.O.U.
    are not import in the terms in which it has been
    defined under Section 2 (23) of the Customs Act,
    according to which import, with its grammatical and
    cogent expression means bringing into India from a
    place outside India. This is also apparent from the
    fact that when the goods are cleared from 100%
    E.O.U. to any place in India, central excise duty
    under Section 3(1) of the Central Excise Act is levied
    and not the customs duty under the Customs Act. If
    it is to be regarded as import, then the duty has to be
    charged under Section 12 of the Customs Act, read
    with Section 3 of the Customs Tariff Act. The
    Revenue, it seems is confusing the measure of the
    tax with the nature of the tax. The nature of the duty
    levied on the goods from 100% E.O.U. is excise duty
    and nothing else, whereas for determining the
    quantum of duty the measure adopted is duty
    leviable under Customs Act as held by the Supreme
    Court in many cases referred to above. The method
    adopted by the law makers in recovering the tax
    cannot alter its character. Once it is held that the
    duty paid by the 100% E.O.U. in respect of goods
    cleared to any place in India is excise duty, the
    question of dissecting the said duty into different
    components of basic customs duty, auxiliary duty,
    additional duty of Customs or any other customs
    19
    duty does not arise. The proforma of AR­1A on which
    the reliance was placed by the learned D.R., cannot
    change the legal position that the duty levied on 100%
    E.O.U. is a duty of excise and not customs duty.”
    (emphasis supplied)
    However, this exposition has no application to the fact situation
    of the present case, in as much as there had been no
    contravention of conditions of EXIM Policy and the issue was only
    about the nature of tax, in case of goods otherwise amenable to
    excise duty.
  19. Concededly, the DTA sales pertaining to excisable goods
    made in conformity with the conditions of the EXIM policy are
    exigible to excise duty, but once there is contravention of the
    condition(s) of the EXIM policy, irrespective of the goods
    produced being excisable or non­excisable, the benefit under the
    exemption notification is unavailable. In such a situation, the
    very goods would become liable to imposition of customs duty as
    if being imported goods.
  20. We may now examine as to what would be the position in
    case of sale of non­excisable goods as per conditions specified
    under the EXIM policy. Assuming there was no contravention of
    the EXIM policy, in case of the goods cleared being non excisable,
    the Paragraph 3 of the exemption notification would come into
    20
    play and the duty would be leviable on the inputs used in such
    goods. It is relevant to bear in mind Section 12 of the 1962 Act
    here, being the charging section, as is set out hereunder:
    “Section 12 – Dutiable Goods
    (1) Except as otherwise provided in this Act, or any
    other law for the time being in force, duties of customs
    shall be levied at such rates as may be specified under
    the Customs Tariff Act, 1975 (51 of 1975), or any other
    law for the time being in force, on goods imported into, or
    exported from, India.
    (2) The provisions of sub­section (1) shall apply in
    respect of all goods belonging to Government as they
    apply in respect of goods not belonging to Government.”
    It is clear from the above provision that the goods which are
    imported shall be charged as specified under the Customs Tariff
    Act, 1975 or “any other law”, unless exempted under the 1962
    Act or by “any other law”.
  21. In the present case, the notification provides for exemption
    on import of inputs and at the same time prescribes for
    adherence of certain conditions for availing the exemption. The
    notification further prescribes the rate at which the customs duty
    on the inputs used in the production of non­excisable goods sold
    in DTA is to be charged. Thus, the notification, having been
    issued in exercise of delegated legislation under Section 25 of the
    1962 Act, has to be understood as “any other law”. Resultantly,
    21
    the appellant, having availed exemption under the notification,
    cannot evade customs duty on the imported inputs at the rate
    prescribed by the notification.
  22. The show cause notice points out that the appellant
    imported raw materials like “Live Rose Plants” and consumables
    like fertilizers and planting materials, however, the appellant
    advisedly chose to confine its argument to “cut flowers”, which,
    as contended, were grown on Indian soil and thus not amenable
    to customs duty. However, the demand made in the show cause
    notice “treating” cut flowers as deemed to have been imported
    was only for the purpose of quantification of the customs duty on
    the imported inputs and not imposition of the customs duty on
    the domestically grown cut flowers as such.
  23. The decision of CESTAT in the case of Cosco Blossoms
    (supra) is of no avail to the appellant. In that case, the tribunal
    had relied upon the decision in Vikram Ispat (supra) and held
    that the cut flowers cleared in DTA sales cannot be charged with
    customs duty, without considering that the goods were non
    excisable. Notably, the Tribunal had granted liberty to the
    authorities to charge customs duty upon the imported inputs, if
    22
    used in production of the goods cleared in DTA, which supports
    the case of the respondent. Paragraph 5 of the aforesaid order
    reads as under:
    “5. It is well settled [2000 (120) E.L.T. 800] that
    goods produced in an EOU cannot be treated as
    imported goods and subjected to customs duty. The duty
    payable in respect of such goods is the duty of excise
    under Section 3 of the Central Excise Act, 1944.
    Therefore, the duty demand made in the impugned order
    under Section 28 of the Customs Act is not sustainable.
    Accordingly, we set aside the impugned order and allow
    the present appeal. However, we make it clear that
    revenue authorities will be at liberty to demand duty
    on the imported inputs, if any, used in the
    production of the cut­flowers in question.
    The appeal is disposed of as above.”
    (emphasis supplied)
  24. A priori, the demand in the present case, pertaining to the
    non­excisable goods has rightly been made under the 1962 Act
    upon the imported inputs used in the production of goods sold in
    DTA in violation of condition(s) in the EXIM Policy.
  25. The decision of CESTAT in Suresh Synthetics (supra) is
    not applicable to the present case. The goods in that case were
    Polyster Textured Yarn, which are excisable goods. The
    investigations were made as per provisions of the Central Excise
    Act, 194416, however, show cause notice was issued under
    16 For short, “the 1944 Act”
    23
    provisions of the 1962 Act. Thus, it was held that the demand is
    not maintainable as it was made under a defective show cause
    notice.
  26. In case of excisable goods, even the present notification
    takes resort to Section 3 of the 1944 Act, as can be seen from the
    Paragraph 3 of the notification extracted above. Whereas, the
    provisions of the 1962 Act are invoked only when the goods are
    non­excisable. In the present case, since the cut flowers are nonexcisable goods, the demand for payment of customs duty had
    rightly been made vide show cause notice under the provisions of
    the 1962 Act.
  27. Moving to the second question, the show cause notice was
    issued to the appellant prior to the issuance of the amendment
    notification. In this backdrop, let us now examine the contention
    of the appellant that the amendment notification being
    retrospective in its application. The relevant portion of the said
    notification is reproduced hereunder:
    “NOTIFICATION NO. 56 /2001­CUS DATED 18.5.2001
    In exercise of the powers conferred by sub­section (1) of
    section 25 of the Customs Act, 1962 (52 of 1962), the
    Central Government being satisfied that it is necessary
    in the public interest so to do, hereby directs that each of
    the notifications of the Government of India in the
    Ministry of Finance (Department of Revenue), specified in
    24
    column (2) of the Table hereto annexed shall be amended
    or further amended, as the case may be, in the manner
    specified in the corresponding entry in column (3) of the
    said Table.
    TABLE
    Sr.No Notification No.
    and Date
    Amendment
    (1) (2) (3)
    xxx Xxx xxx
  28. 126/94­Cus
    dated the 3rd
    June, 1994
    In the said notification,­
    (a) in the first paragraph, in
    condition (6), after clause (d),
    the following shall be inserted,
    namely:­
    ” (e) permit destruction of rejects
    and waste without payment of
    duty within the unit, or outside
    the said unit, where it is not
    possible or permissible to
    destroy the same within the said
    unit, in the presence of Customs
    or Central Excise officer.”;
    (b) in paragraph 2, in the
    proviso, for the words and
    figures “duty of 15% ad
    valorem”, the words and figure
    “duty of 5% ad valorem” shall be
    substituted;
    (c) in paragraph 3, in clause
    (a), for the words “on payment
    of customs duty on the said
    goods used for the purpose of
    production, manufacture or
    packaging of such articles in
    an amount equal to the
    customs duty leviable on such
    articles as if imported as
    such.”, the following shall be
    substituted, namely:­
    “customs duty equal in
    amount to that leviable on
    25
    inputs obtained under this
    notification and used for the
    purpose of production,
    manufacture or packaging of
    such articles, which would
    have been paid, but for the
    exemption under this
    notification, shall be payable
    at the time of clearance of
    such articles.
    …..”
    (emphasis supplied)
  29. As can be seen, the aforesaid notification posits of carrying
    out amendments and substituting the charging clause of the
    inputs used in case of non­excisable goods. The language
    employed in the notification does not offer any guidance on
    whether the amendments as made were to apply prospectively or
    retrospectively. It is a settled proposition of law that all laws are
    deemed to apply prospectively unless either expressly specified to
    apply retrospectively or intended to have been done so by the
    legislature. The latter would be a case of necessary implication
    and it cannot be inferred lightly.
  30. In this regard, the appellant has heavily relied upon the
    CBEC Circular to contend that the Government intended to apply
    the notification retrospectively as it was brought in to address an
    26
    anomaly, which existed vis a vis central excise notifications. The
    relevant portion of the CBEC Circular is extracted hereunder:
    “Circular No. 31/2001­Cus, dated 24­5­2001
    xxx xxx xxx
    (xi) Duty on DTA Clearance of Non­Excisable Goods;
  31. At present, the EOUs and units operating under
    EPZ/STP/EHTP Schemes are allowed to sell finished
    products (including rejects, waste & scrap) in the
    Domestic Tariff Area (DTA) on payment of applicable
    excise duty as per proviso to Section 3 of the Central
    Excise Act, 1944. However, the same is applicable if the
    goods being cleared into DTA are excisable goods. Under
    the present dispensation, the notifications providing duty
    free import of goods under the above said Schemes
    stipulate that where the finished products (including
    rejects, wastes & scrap) sought to be cleared in DTA are
    not excisable, such products are allowed to be cleared on
    payment of customs duty on the inputs used for the
    purpose of production, manufacture, processing or
    packaging such products in an amount equal to the
    customs duty leviable on such products as if imported as
    such.
  32. It has been brought to notice of the Board that
    in some Commissionerates, the floriculture units under
    the EOU Scheme are being asked to pay duty equivalent
    to the customs duty leviable on finished goods as if
    imported as such, for clearance of cut­flowers, which is
    not an excisable commodity. It has also been stated that
    the DTA units are not required to pay any duty for sale of
    cut­flowers, as the same are not excisable. This is stated
    to have placed the floriculture units in EOUs at a serious
    disadvantageous position vis­a­vis DTA units.
  33. The matter has been examined. In the central
    excise notifications governing duty free procurement by
    EOUs and units under EPZ/STP/ETHP Schemes, there
    is a provision to recover duty on the inputs &
    consumables procured duty free under exemption
    notification, which have gone into production of nonexcisable goods cleared into DTA. In the notifications
    governing duty free import by EOUs and the
    EPZ/STP/EHTP units, the anomaly, however, exists
    inasmuch as the notifications talk about payment of
    customs duty on the inputs used in the manufacture
    27
    of articles in an amount equal to the customs duty
    leviable on such articles as if imported as such. In
    order to remove this anomaly, all the notifications
    governing duty free import of goods by STP/EHTP/EPZ
    units and EOUs including those in Aquaculture and
    Agriculture sector have been amended so as to bring the
    provisions of these notifications in harmony with the
    provisions of corresponding Central Excise notifications.
    Notification No. 56/2001­Cus, dated 18­5­2001 may be
    seen for details.”
    (emphasis supplied)
  34. Upon a bare reading of the circular, it can be noted that it
    discusses the mechanism in force before the amendment, the
    reason for bringing in the change and the changes brought in.
    The circular does not mention that the earlier methodology in
    force was deficient or devoid of clarity in any manner. It rather
    says that the same was being disadvantageous to the EOU units
    as compared to the DTA units due to the difference in charging
    rates in the respective circulars. Upon considering that, the
    amendment has been brought in to establish parity with the
    excise notifications and to vindicate the disadvantage that earlier
    regime was causing to EOU units. Merely because an anomaly
    has been addressed, it cannot be passed off as an error having
    been rectified. Unless shown otherwise, it has to be seen as a
    conscious change in the dispensation, particularly concerning
    the fiscal subject matters. The word “anomaly” has been defined
    28
    in Webster’s New Twentieth Century Dictionary to mean
    “abnormality; irregularity; deviation from the regular
    arrangement, general rule or the usual method”.
  35. In the context of the subject circular, since it takes note of
    the previous arrangement and distinguishes it from the excise
    notifications, the meaning has to be taken as deviation from the
    regular arrangement, which by no stretch of imagination can be
    treated as a mere mistake. To call the amendment notification
    clarificatory or curative in nature, it would require that there had
    been an error/mistake/omission in the previous notification
    which is merely sought to be explained.
  36. To understand if the Government brought in the
    amendment notification to clarify that the articles were to be
    charged at the rate of duty provided for inputs and not for the
    final articles, it would be necessary to analyse the position prior
    to the amendment and to see if duty on inputs chargeable at the
    rate of final articles was an error that crept in. In this regard, we
    may refer to Section 3 of the 1944 Act as it stood during the
    relevant period, which is set out hereunder:
    29
    “Section 3. Duties specified in the First Schedule and
    the Second Schedule to the Central Excise Tariff Act,
    1985 to be levied­
    (1) There shall be levied and collected in such manner as
    may be prescribed,­
    (a) a duty of excise on all excisable goods which are
    produced or manufactured in India as, and at the
    rates, set forth in the First Schedule to the Central
    Excise Tariff Act, 1985 (5 of 1986);
    (b) a special duty of excise, in addition to the duty of
    excise specified in Clause (a) above, on excisable
    goods specified in the Second Schedule to the
    Central Excise Tariff Act, 1985 (5 of 1986) which are
    produced or manufactured in India, as, and at the
    rates, set forth in the said Second Schedule.
    Provided that the duties of excise which shall be
    levied and collected on any excisable goods which are
    produced or manufactured,­­
    (i) in a free trade zone and brought to any
    other place in India; or
    (ii) by a hundred per cent export­oriented
    undertaking and allowed to be sold in India,
    shall be an amount equal to the aggregate of the
    duties of customs which would be leviable Under
    Section 12 of the Customs Act, 1962 (52 of 1962), on
    like goods produced or manufactured outside India if
    imported into India, and where the said duties of
    customs are chargeable by reference to their value;
    the value of such excisable goods shall,
    notwithstanding anything contained in any other
    provision of this Act, be determined in accordance
    with the provisions of the Customs Act, 1962 (52 of
    1962) and the Customs Tariff Act, 1975 (51 of 1975).”
    (emphasis supplied)
    The proviso to the charging section of the 1944 Act provides that
    an EOU making DTA sales shall be charged duty as if the goods
    were imported into India and in value equal to the customs duty
    chargeable thereto. No doubt, the said provision applies only in
    30
    cases of excisable goods, but the exemption notification providing
    for similar duty by terms thereunder for non­excisable goods, can
    be understood to have been made to equate the duty in case of
    excisable as well as non­excisable goods. Therefore, it must follow
    that the said provision was not an error that crept in but was
    intentionally introduced by the Government to determine the
    charging rate, as discussed above. That being the position prior
    to amendment, the amendment brought in cannot be said to be
    clarificatory in nature.
  37. The decision of this Court in Zile Singh (supra) is of no
    avail to the appellant. In as much as it was a case of poor choice
    of words by the draftsmen, which led to absurdity in
    interpretation and a subsequent substitution of such words to
    make the intention clear. In the present case, as discussed
    above, there was no error present in the prevailing dispensation
    and it was a policy decision to give relief to the EOU units from
    the date of its amendment.
  38. In Vatika Township (supra), Constitution Bench of this
    Court has analysed the principle concerning retrospectivity. The
    31
    appellant heavily relies upon the observation made at paragraph
    30 of the decision, which reads thus:
    “30. … If a legislation confers a benefit on some
    persons but without inflicting a corresponding detriment
    on some other person or on the public generally, and
    where to confer such benefit appears to have been the
    legislators’ object, then the presumption would be that
    such a legislation, giving it a purposive construction,
    would warrant it to be given a retrospective effect. …”.
    The appellant clearly misinterprets the context of the above
    observation by reading the same in isolation. To have a better
    understanding of the said principle, it is relevant to read the
    preceding and subsequent paragraphs. We may here refer to
    Paragraph 32 of the said decision, which is extracted below:
    “32. Let us sharpen the discussion a little more. We
    may note that under certain circumstances, a particular
    amendment can be treated as clarificatory or declaratory
    in nature. Such statutory provisions are labelled as
    “declaratory statutes”. The circumstances under which
    provisions can be termed as “declaratory statutes” are
    explained by Justice G.P. Singh in the following manner:
    “Declaratory statutes
    The presumption against retrospective operation
    is not applicable to declaratory statutes. As stated in
    CRAIES and approved by the Supreme Court: ‘For
    modern purposes a declaratory Act may be defined as
    an Act to remove doubts existing as to the common
    law, or the meaning or effect of any statute. Such Acts
    are usually held to be retrospective. The usual reason
    for passing a declaratory Act is to set aside what
    Parliament deems to have been a judicial error,
    whether in the statement of the common law or in the
    interpretation of statutes. Usually, if not invariably,
    such an Act contains a Preamble, and also the word
    “declared” as well as the word “enacted”.’ But the use
    32
    of the words ‘it is declared’ is not conclusive that the
    Act is declaratory for these words may, at times, be
    used to introduced new rules of law and the Act in the
    latter case will only be amending the law and will not
    necessarily be retrospective. In determining, therefore,
    the nature of the Act, regard must be had to the
    substance rather than to the form. If a new Act is ‘to
    explain’ an earlier Act, it would be without object
    unless construed retrospective. An explanatory Act is
    generally passed to supply an obvious omission or
    to clear up doubts as to the meaning of the
    previous Act. It is well settled that if a statute is
    curative or merely declaratory of the previous law
    retrospective operation is generally intended. The
    language ‘shall be deemed always to have meant’ is
    declaratory, and is in plain terms retrospective. In
    the absence of clear words indicating that the
    amending Act is declaratory, it would not be so
    construed when the pre­amended provision was
    clear and unambiguous. An amending Act may be
    purely clarificatory to clear a meaning of a
    provision of the principal Act which was already
    implicit. A clarificatory amendment of this nature will
    have retrospective effect and, therefore, if the principal
    Act was existing law which the Constitution came into
    force, the amending Act also will be part of the existing
    law.”
    The above summing up is factually based on the
    judgments of this Court as well as English decisions.”
    Upon reading the observations at Paragraph 30 and juxtaposed
    with paragraph 32, it is crystal clear that an essential
    requirement for application of a legislation retrospectively is to
    show that the previous legislation had any omission or ambiguity
    or it was intended to explain an earlier act. In absence of the
    above ingredients, a legislation cannot be regarded as having
    retrospective effect.
    33
  39. In IndusInd Bank (supra), this Court, while examining
    whether the amendment made to Section 28 of the Indian
    Contract Act, 1872 was prospective or retrospective, has noted
    that the said provision is remedial in nature and not clarificatory,
    since prior to the amendment, the rights and liabilities accrued
    were sought to be taken away. Paragraph 24 of the said decision
    is reproduced below:
    “24. On a conspectus of the aforesaid decisions, it
    becomes clear that Section 28, being substantive law,
    operates prospectively, as retrospectivity is not clearly
    made out by its language. Being remedial in nature,
    and not clarificatory or declaratory of the law, by
    making certain agreements covered by Section 28(b)
    void for the first time, it is clear that rights and
    liabilities that have already accrued as a result of
    agreements entered into between parties are sought
    to be taken away. This being the case, we are of the
    view that both the Single Judge and the Division Bench
    were in error in holding that the amended Section 28
    would apply.”
    We are in agreement with the respondent that this decision
    squarely applies to the present case as prior to the amendment,
    the DTA sales made by the appellant have already attracted
    liability at the prescribed charging rate, which in facts of the
    present case cannot be undone in reference to the subject
    amendment.
    34
  40. It is relevant here to advert to a decision of Constitution
    Bench of this Court in Commissioner of Central Excise, New
    Delhi vs. Hari Chand Shri Gopal & Ors.17
    , wherein it has been
    held that an exemption clause ought to be strictly construed
    according to the language employed therein and in case of any
    ambiguity, benefit must go to the State. It will be useful to
    reproduce paragraphs 29 and 30 of the aforesaid decision
    hereunder:
    “29. The law is well settled that a person who claims
    exemption or concession has to establish that he is
    entitled to that exemption or concession. A provision
    providing for an exemption, concession or exception, as
    the case may be, has to be construed strictly with certain
    exceptions depending upon the settings on which the
    provision has been placed in the statute and the object
    and purpose to be achieved. If exemption is available
    on complying with certain conditions, the conditions
    have to be complied with. The mandatory
    requirements of those conditions must be obeyed or
    fulfilled exactly, though at times, some latitude can be
    shown, if there is a failure to comply with some
    requirements which are directory in nature, the noncompliance of which would not affect the essence or
    substance of the notification granting exemption.
  41. In Novopan India Ltd. this Court held that a
    person, invoking an exception or exemption
    provisions, to relieve him of tax liability must
    establish clearly that he is covered by the said
    provisions and, in case of doubt or ambiguity, the
    benefit of it must go to the State. A Constitution
    Bench of this Court in Hansraj Gordhandas v. CCE and
    17 (2011) 1 SCC 236
    35
    Customs held that (Novopan India Ltd. case, SCC p. 614,
    para 16)
    “16. … such a notification has to be interpreted
    in the light of the words employed by it and not
    on any other basis. This was so held in the
    context of the principle that in a taxing statute,
    there is no room for any intendment, that regard
    must be had to the clear meaning of the words
    and that the matter should be governed wholly
    by the language of the notification i.e. by the
    plain terms of the exemption.” ”
    Applying the aforequoted dictum to the present case, the
    appellant was obliged to comply with the conditions prescribed
    by the EXIM Policy, to avail the exemption under the stated
    notification; and failure to do so, must denude them of the
    exemption so granted. Further, since the charging rate prescribed
    under the exemption notification is under question, any
    ambiguity in regard to the date of application of the amendment
    thereto would necessarily have to be construed in favour of the
    State, unless shown otherwise by judicially acceptable
    parameters.
  42. The next contention of the appellant is that Section 28 of
    the 1962 Act cannot be invoked to extend the limitation as there
    was no wilful mis­statement or suppression of facts on behalf of
    the appellant. The decision of this Court in Uniworth Textiles
    36
    (supra), has been relied upon by the appellant. The same
    explains the situations in which Section 28 of the 1962 Act can
    be invoked. It had been held in the said decision that the
    extension of limitation for a period of five years can be done only
    in cases of deliberate default and not inadvertent non­payment.
    It was further held that the burden for proving mala fide conduct
    is on the revenue; and specific averments in that regard must
    find place in the show cause notice.
  43. 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 ex­post 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
    37
    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.
  44. In light of the foregoing discussion and observations, we are
    of the view that CESTAT has rightly upheld the levy of customs
    duty.
  45. This appeal, therefore, deserves to be dismissed. It is so
    ordered. There shall be no order as to costs. Pending
    applications, if any, shall stand disposed of.
    ……………………………, J.
    (A.M. Khanwilkar)
    ……………………………, J.
    (Dinesh Maheshwari)
    New Delhi;
    September 1, 2020.