DTA clearances under Development Commissioner approval bar contrary duty demands when the competent authority has accepted the entitlement.

DTA clearances made in accordance with the Development Commissioner's permission could not be recharacterised by Customs on a contrary reading of the EXIM Policy. The Tribunal held that, where the competent authority had treated the goods as a single approved item and confirmed that the clearances were within the permitted entitlement, the Revenue could not sustain a duty demand under Section 11A. The connected penalties and interest also failed because they were dependent on the unsustainable demand. The Revenue's appeal was rejected and the order dropping proceedings was upheld.

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Issues: Whether the Revenue could sustain a demand of duty and consequential penalties by interpreting the EXIM Policy contrary to the Development Commissioner's approval of DTA clearances made by the assessee.

Analysis: The assessee's clearances into the Domestic Tariff Area were made under permission granted by the Development Commissioner, who had treated the manufactured goods as a single approved item and had clarified that the clearances were within the entitlement permitted by the policy. The Tribunal noted that the Customs authorities are not entitled to adopt a view contrary to the Development Commissioner's interpretation in such matters, especially when the clearances were made in terms of the permission granted. In that view, the duty demand raised under Section 11A could not be sustained, and the connected penalties and interest also could not survive.

Conclusion: The demand of duty and the consequential penalty and interest were unsustainable; the Revenue's appeal was rejected and the order dropping proceedings was upheld.

Ratio Decidendi: Where DTA clearances are made in accordance with the Development Commissioner's and the competent authority has construed the EXIM Policy in the assessee's favour, the Revenue cannot displace that construction to raise a contrary duty demand.

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