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TMI Blog2006 (7) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... e minimum NFEP (Net Foreign Exchange earning expressed as percentage of export) prescribed in Appendix I to the EXIM Policy 2002-07. Subsequently, in a letter dated 22-5-02, the Development Commissioner permitted the unit to sell their products in Domestic Tariff Area (DTA) to the extent of 50% of the FOB value of the physical exports made during 2000-01, this fraction amounting to Rs. 477.28 lakhs. This permission was granted in terms of para 6.8(b) of the EXIM Policy 2002-07 and was subject to the following conditions :- 1. This DTA sale entitlement will be applicable only to those goods that are approved for manufacture in the Letter of Approval issued to ycu. Disposal of waste/reject shall also be availed within the above entitlement. 2. All conditions laid down in the guidelines for DTA sales as per Appendix 14(f) of Handbook of Procedures 2002-07 shall be strictly followed. 3. This DTA sale entitlement shall be availed of within three years w.e.f. 1-4-2001 to 31-3-2004. 4. The sale of goods in DTA will be subject to the payment of necessary customs duties applicable. Subsequently, by letters dated 18-7-2002 and 14-8-2002, the Development Commissioner granted per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondents was not admissible to them. In this connection, it was argued that the terms and conditions of an Exemption Notification were to be construed strictly as held by the Apex Court in the cases of Rajasthan Spinning Weaving Mills [1995 (77) E.L.T. 474], Novopan India Ltd., [1994 (73) E.L.T. 769] and Mangalore Chemicals Fertilizers Ltd. [1991 (55) E.L.T. 437]. Reliance was also placed on the apex court s judgment in the case of Tullow India Operations Ltd. [2005 (189) E.L.T. 401]. Ld. SDR ruled out any connection between DTA sales under para 6.8 and those under para 6.9 of the EXIM Policy. The two provisions were independent of each other. The DTA clearances under para 6.9 were not limited to 50% of the FOB value of exports prescribed in para 6.8 and the same were also not subject to the condition of fulfilment of minimum NFEP/EP. Though the Development Commissioner s permission was for clearance of wooden boxes under para 6.8(b), the respondents chose to clear the goods in terms of para 6.9(b) for availing deemed export benefits. The EXIM Policy did not envisage such double benefit. 3. Ld. counsel for the respondents submitted that the benefit of the Notification w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed on the Tribunal s decision in the cases of Modern Denim Ltd. v. Commissioner, 2005 (191) E.L.T. 1174 (Tri.-Mumbai) and Commissioner v. Suresh Synthetics, 2005 (190) E.L.T. 199 (Tri.-Mumbai). Yet another alternative argument was that, as the wooden boxes supplied to the DTA unit were actually exported by that unit, the respondents were eligible for the benefit of Notification No. 43/2001-C.E. (N.T.) issued under Rule 19 of the Central Excise Rules, 2002. In this connection, reference was made to CBEC Circular No. 314/30/97-CX dated 6-5-97 and reliance was placed on the Tribunal s decision in Paras Fab International v. Commissioner, 2003 (153) E.L.T. 549 (Tri.- Del.). 4. We have examined the records and considered the submissions. The basic facts are not in dispute. The respondents (100% EOU) were permitted by the Development Commissioner to manufacture guitars and parts and accessories thereof, besides wooden boxes and other wooden articles. They were also permitted to sell 50% of their physical exports, in DTA in terms of para 6.8(b) of the EXIM Policy 2002-07 vide Development Commissioner s letter dated 22-5-02. This letter also stated that the DTA sale entitlement allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions that para 6.9(b) operated in the area of fulfilment of a condition attached to the DTA sale entitlement granted to EOU under para 6.8(b). Hence it is erroneous to hold that the provisions of para 6.8 and those of para 6.9 of the EXIM Policy are independent of each other. It was also argued on behalf of the appellant that, as any wooden box was not physically exported by the respondents, they did not qualify for entitlement under para 6.8(b) of the EXIM Policy. This argument does not take into account the fact that the Development Commissioner vide letter dated 22-5-2002 had expressly allowed the EOU to claim such entitlement in respect of all goods permitted for manufacture. Admittedly, wooden boxes were also permitted to be manufactured by the EOU and, therefore, it cannot be gainsaid that the party qualified for entitlement under para 6.8(b) of the EXIM Policy in respect of the DTA sales of wooden boxes. We have found that both the above points are adequately covered in favour of the respondents by the Tribunal s decision in the case of Kurt-O-John Shoe Components (I) P. Ltd. v. CCE (supra), wherein it was held that supplies made by EOU to DTA against foreign exchange w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be sold at the concessional rate of duty available in the Notification No. 2/95 supplies to domestic tariff area against foreign exchange would be treated on the same footings as physical exports. We also observe that Appellate Tribunal has considered the question about the authority of Development Commissioner to determine the extent of DTA sale in the case of Ginni International Ltd. (supra). The Tribunal was of the view that once the Development Commissioner has allowed the appellants permission to sell the goods up to a fixed value in the DTA, the Revenue cannot disallow clearance and demand Central Excise duty on the ground that the entitlement was required to be restricted to 50% of the FOB value of physical exports. Following the decisions in Ginni International and Virlon Textile Mills, the Appellate Tribunal in the case of Morgaon Tetronics Ltd. allowed the Appeal filed by the Appellants against the Adjudication Order by which the Commissioner has confirmed the demand of Central Excise duty in respect of sales made in Domestic Tariff Area and not agreeing with the Department that sale entitlement would accrue only against physical exports and partial exemption on DTA ..... X X X X Extracts X X X X X X X X Extracts X X X X
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