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Issues: Whether goods cleared by a 100% export-oriented unit under Para 9.10(b) of the EXIM Policy were covered by the expression "allowed to be sold in India" in the proviso to Section 3 of the Central Excise Act, 1944 and Notification No. 125/84-CX, and whether the duty demand and consequential penalties required re-determination.
Analysis: The expression "allowed to be sold in India" in the proviso to Section 3 of the Central Excise Act, 1944 was treated as having a restricted meaning, consistent with the earlier understanding of the Supreme Court in SIV Industries and the Tribunal's own precedent. Clearances made under Para 9.10(b) of the EXIM Policy were not treated as the same as DTA sales permitted under the policy framework governing sales "allowed to be sold in India". The same phrase in Notification No. 125/84-CX required the same construction. The order under challenge had not properly considered the binding effect of the Supreme Court's interpretation, the notification, or the Board's circular on the nature of levy applicable to such clearances. Since the duty position had to be reconsidered first, the penalties based on that demand could not be sustained without fresh determination.
Conclusion: The duty demand and penalties were set aside and the matter was remanded to the original authority for fresh determination of levy, if any, under Notification No. 125/84-CX, followed by reconsideration of penalty.
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