Concessional duty on authorised domestic tariff area sales survives deemed-export treatment for export-performance calculations.

Wooden boxes manufactured by a 100% export-oriented unit and cleared to a domestic tariff area buyer under the Development Commissioner's permission qualified for concessional duty under Notification No. 8/97-C.E. The permission specifically covered domestic tariff area sale of the goods, and paragraph 6.9(b) of the Export and Import Policy merely treated the same supplies as deemed exports for export-performance purposes; it did not create a separate clearance route or remove the benefit attached to authorised domestic sale. On this construction, the later accounting of the supplies as deemed exports did not defeat eligibility for the exemption, and the differential duty demand was not sustainable.

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Issues: Whether wooden boxes cleared by a 100% export-oriented unit to a domestic tariff area buyer under paragraph 6.8(b) of the Export and Import Policy 2002-07, and simultaneously reckoned as deemed exports under paragraph 6.9(b), qualified for concessional duty under Notification No. 8/97-C.E.

Analysis: The permission granted by the Development Commissioner expressly covered the goods manufactured by the unit, including wooden boxes, and allowed their sale in the domestic tariff area under paragraph 6.8(b). Paragraph 6.9(b) did not create an independent mode of clearance but only enabled supplies against foreign exchange to be counted towards fulfilment of export performance and net foreign exchange requirements. The notification was strictly construed, but its language covered goods manufactured entirely out of indigenous raw materials and allowed to be sold in the domestic tariff area under the relevant export policy provision. The later treatment of the same supplies as deemed exports for performance calculations did not take away the entitlement already granted for domestic tariff area sale.

Conclusion: The wooden boxes were eligible for the benefit of Notification No. 8/97-C.E., and the demand of differential duty was not sustainable.

Final Conclusion: The assessee's domestic tariff area clearances retained the concessional benefit attached to the Development Commissioner's permission, and the Revenue's appeal failed.

Ratio Decidendi: Where the Development Commissioner authorises domestic tariff area sale of specified goods under the export policy, the subsequent counting of the same supplies as deemed exports for export-performance purposes does not negate eligibility for an exemption notification that applies to such authorised domestic tariff area sales.

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