Withdrawal of revised policy option kept the earlier value addition formula applicable until revised approval became effective.

Where an existing unit withdrew its option to shift to a revised value addition formula under the Export and Import Policy, it remained governed by the earlier formula until the revised approval became operative. The Bombay HC noted that the Development Commissioner was in applying the formula applicable to each period, including quarterly computation of indigenous raw material consumption, for the interval before the revised approval took effect. On that basis, recalculation of Domestic Tariff Area sale entitlement on the old formula was upheld, and the challenge to the revised formula being applied retrospectively was rejected.

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Issues: Whether, after withdrawal of the petitioners' option to shift to the revised value addition formula under the Export and Import Policy, the Development Commissioner was right in applying the old formula for the period from the commencement of commercial production until the revised approval took effect, and in recalculating the Domestic Tariff Area sale entitlement accordingly.

Analysis: Paragraph 119 of the Export and Import Policy, 1992-97 was amended by the public notice dated 16 August 1993 with effect from 1 April 1993, and existing units were given an option either to continue under the old formula or to adopt the revised formula. The petitioners initially opted for the revised formula, but later withdrew that request. In these circumstances, they continued to be governed by the earlier formula until the revised value addition was approved with effect from 1 April 1995. The Development Commissioner therefore correctly took the petitioners' indigenous raw material consumption and related figures into account on a quarterly basis for the relevant period and applied the formula that was operative for each segment of time.

Conclusion: The challenge to the recalculation of value addition and DTA sale entitlement failed, and the petitioners' claim to have the revised formula applied for the earlier period was rejected.

Final Conclusion: The writ petition was dismissed, and the respondents were left free to adjust the excess DTA sale already availed against future entitlements.

Ratio Decidendi: Where an assessee is given an option to shift to a revised policy formula but withdraws that option, the assessee remains bound by the pre-existing formula until the revised approval becomes operative.

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