Deemed exports to other EOU as raw materials for further manufacture for export - whether the deemed exports has to be included for the purpose of determining entitlement in the DTA

2009 -TMI - 33306 - CESTAT AHMEDABAD

The basic dispute arises on account of differing perception on the terms "exports". There are two categories of exports namely, physical exports, which are physically exported out of the country and the deemed exports, which are supplies made to 100% EOUs as raw materials for further manufacture and the manufactured goods being ultimately exported. The Development Commissioner has granted permission for DTA sales up to 50% in terms of Exim Policy for the DTA sales treating deemed exports on par with the physical exports. The Revenue Department held that the deemed exports cannot be equated with physical exports and as DTA sales arrived at was in excess of the 50% (by taking only the physical exports into account) and demanded the duty.

This issue as to whether the deemed exports has to be included for the purpose of determining entitlement in the DTA has been decided in favour of assessee by the Tribunal in the case of M/s. Amitex Silk Mills P. Ltd. (2009 TMI - 33592 - Tri)This decision has been followed by the Tribunal in several subsequent decisions. Therefore, we hold that the clearances made by the respondent are clearly within the permissible limit of DTA sales as permitted by the Development Commissioner.

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