2014 (2) TMI 1061 - AT - Customs

Computation of Net Foreign Exchange (NFE) - export obligation - deemed export - Adjudicating Authority held that the entire monetary realisation of appellant s clearances/sales proceeds have been effected in Indian currency and not foreign exchange - Whether the clearance made in DTA against Advance Authorisation, where payments are not received in foreign currency, are admissible for the purpose of fulfilling export obligation under Exim Policy or not - Held that - It is evident from the provisions/procedures prescribed that supplies made under Para 6.9 of Chapter-6 of the Exim Policy has to be included while calculating NFE. It is further observed from Para 6.9 of the Exim Policy, effective from 1.4.2006, that Clause 6.9(b) relied upon by the Adjudicating Authority was deleted and did not exist during the period under dispute. No other contrary provision was brought to the knowledge of the Bench to the effect that such DTA sales under Advance Authorisation Scheme are not to be considered for the purpose of calculating NFE. Even the concerned monitoring agency of Development Commission, KSEZ, Gandhiham vide Final Exit Order dated 25.1.2011, issued from F No. KASEZ/100%EOU/II/62/05-06/3390 has finally allowed exit from the 100% Scheme approved under the LOP No. ESEZ/100% EOU/II/62/05-06 dated 21.4.2006 - Decided in favour of assessee.

Summary

Issues:
1. Admissibility of clearance made in DTA against Advance Authorisation for fulfilling export obligations under Exim Policy.
2. Interpretation of Para 6.9 of the Exim Policy and its relevance in calculating Net Foreign Exchange (NFE).

Issue 1: Admissibility of clearance made in DTA against Advance Authorisation for fulfilling export obligations under Exim Policy:
The appellant availed exemption under Notification No. 52/003-cus by making clearances to a specific entity against Advance Authorisation Scheme, considered as deemed exports. The Adjudicating Authority held that since the monetary realisation was in Indian currency and not in foreign exchange, demands were confirmed with penalties under the Central Excise Act 1944 and Customs Act 1962. The appellant argued that export obligations under the Foreign Trade Policy were fulfilled, and the Adjudicating Authority erred in relying on a deleted provision of Para 6.9(b) of the Foreign Trade Policy. The appellant contended that the value of exports under Para 6.9 of the Exim Policy should be included for calculating NFE. The Revenue defended the original order.

Issue 2: Interpretation of Para 6.9 of the Exim Policy and its relevance in calculating Net Foreign Exchange (NFE):
The key issue was whether clearances made in DTA against Advance Authorisation, without foreign currency receipts, could fulfill export obligations under the Exim Policy. The Adjudicating Authority based its decision on the absence of NFE due to payments not being in foreign currency as per Para 6.9(b) of the Exim Policy. However, the guidelines by the monitoring authority for EOU/SEZ units stated that supplies under Para 6.9 of the Exim Policy should be considered for calculating NFE. It was noted that the clause 6.9(b) was deleted from the Exim Policy effective from 1.4.2006, and no contrary provision excluded DTA sales under Advance Authorisation from NFE calculations. The final Exit Order issued by the monitoring agency allowed exit from the 100% Scheme, further supporting the inclusion of DTA sales for NFE calculations. Consequently, the appeals by the appellant were allowed.

This detailed analysis of the judgment highlights the issues involved, arguments presented by both parties, relevant legal provisions, and the final decision rendered by the Appellate Tribunal CESTAT AHMEDABAD.