In Brief
M/s. L.R. Brothers Indo Flora Ltd, a 100% Export Oriented Unit engaged in floriculture, made sales of cut flowers in the Domestic Tariff Area (DTA) without prior Development Commissioner approval and without maintaining required foreign exchange earnings. The Supreme Court held that such sales breached the Export-Import Policy conditions, forfeiting exemption from customs duty. Since cut flowers are non-excisable goods, customs duty was properly levied on the imported inputs used in their production, calculated as if the final goods were imported. The Court rejected arguments that Notification 56/01-Cus was retrospectively clarificatory, holding it a prospective policy change. The demand was maintainable under the Customs Act, and the extended limitation period applied due to the appellant's willful suppression of facts. The appeal was dismissed."
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