2003 (7) TMI 179 - AT - Central Excise

Summary

Issues:
Determining whether clearances under Paragraph 9.10(b) of the EXIM Policy 1997-2002 should be considered for the limit of sale of goods by a 100% Export-Oriented Undertaking into the Domestic Tariff Area (DTA).

Analysis:
The Appellant, a 100% Export-Oriented Undertaking, argued that supplies to DTA against payment in foreign exchange should count towards export performance fulfillment. They contended that the Development Commissioner granted permission for DTA sales under Para 9.9(b) of the EXIM Policy, subject to duties and export performance. The Commissioner demanded excise duty, citing that only physical exports should determine FOB value. The Appellant cited the Ginni International Ltd. case, where the Tribunal ruled that DTA sales permission granted by the Development Commissioner should not be restricted based on physical exports. They also referenced the Virlon Textile Mills case, where Tribunal deemed DTA sales as exports for Para 9.9 purposes. The Appellant argued that these precedents were consistently followed by the Tribunal.

The Departmental Representative argued that the total value of goods cleared for home consumption should not exceed 50% of FOB value of exports, as per Notification No. 2/95 C.E. They distinguished the Ginni International case, stating it dealt with a different exemption notification than the current matter. The Department contended that the exemption under Notification No. 2/95-C.E. was limited to 50% of FOB value of exports.

The Tribunal analyzed Notification No. 2/95-C.E., which provides a concessional excise duty rate for goods sold in India under specific EXIM Policy paragraphs. They noted that DTA sales up to 50% of FOB value of exports are allowed under Para 9.9(b). The Tribunal referenced previous cases to conclude that DTA sales against foreign exchange should be treated as exports for Para 9.9 purposes. They highlighted that the Development Commissioner's permission for DTA sales should not be restricted based on physical exports, following the decisions in Ginni International and Virlon Textile Mills. Consequently, the Tribunal allowed the Appeal based on the precedents and the interpretation of relevant provisions.

In conclusion, the Tribunal ruled in favor of the Appellant, emphasizing that DTA sales against foreign exchange should be considered exports for the purpose of determining entitlements under Notification No. 2/95-C.E. The decision aligned with previous judgments and the interpretation of relevant EXIM Policy paragraphs.