Expression allowed to be sold cannot be interpreted as the compulsory condition that goods must be actually sold

Brief of the case:

• The Hon’ble Supreme Court in the case of Nestle India Ltd. held that partial exemption available under exemption notifications does not require assessee to clear the goods by way of sale only because in the notification expression “allowed to be sold” has been used which implies that goods cleared should only be those which are allowed to be sold in India as per EXIM policy.
• Therefore, in the present case assessee was entitled to claim benefit under the notification even if the goods not actually sold and only captively consumed.

Facts of the case:

• The assessee (respondent) company is engaged in the manufacture of instant tea falling under Chapter 2101.20 of schedule to the Central Excise Tariff Act, 1985. Assessee cleared instant tea by taking benefit of exemption notification no.- 8/97-CE dated 1.3.1997 and Notification No.23/2003 CE dated 31.3.2003.
• The exemption was partial exemption to the extent of so much of the duty of excise leviable thereon under section 3 of the Central Excise Act, 1944 (1 of 1944), as is in excess of an amount equal to the duty of excise leviable under the said section 3 of the Central Excise Act, on like goods, produced or manufactured in India other than in a hundred per cent export-oriented undertaking or a free trade zone, if sold in India.
• Assessee was issued show cause notice alleging that tea was transferred only to two sister concerns and no sale was involved, the assessable value of instant tea remove d to the its own units would be determined on the basis of the export price of similar goods and not 115% of the cost of production.
• The show cause notice was confirmed by adjudication order raising a demand of duty amount of Rs. 42,86,079/- and equivalent penalty. Such demand and penalty was confirmed by the Commissioner (Appeals). Aggrieved by the same assessee approached to CESTAT which set aside the order of lower authorities by holding that the very basis of issuing show cause notice was not tenable because notification does not mandatorily require actual sale of goods by EOU rather goods should be such as such which are allowed to be sold in India as per EXIM policy. It is therefore, valuation to be made only as per Central Excise Valuation Rules and not as per Customs Rules.
• Aggrieved revenue filed an appeal before High Court against the order of tribunal.
  

Contention of the Assessee: