Deemed exports excluded from FOB value for DTA sale entitlement under the EXIM Policy and customs notification.

Deemed exports are excluded from the free on board value used to compute entitlement to domestic tariff area sales under paragraph 9.9(b) of the EXIM Policy and Notification No. 2/95-C.E. The operative distinction is that export entitlement is tied to goods physically taken out of India, based on the statutory definitions of export in the Customs Act, 1962 and the Foreign Trade (Development and Regulation) Act, 1992. Deemed exports under paragraph 9.10 operate as a separate concession for export obligation purposes and do not form part of physical exports for calculating DTA entitlement. The Board circular and jurisdictional High Court view were followed, and the contrary Supreme Court ruling cited was distinguished.

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Issues: Whether deemed exports can be included in the free on board value of exports for computing entitlement to domestic tariff area sales under paragraph 9.9(b) of the EXIM Policy and Notification No. 2/95-C.E.

Analysis: The entitlement under paragraph 9.9(b) and the amended notification was held to be linked to 50% of the FOB value of exports, which on the plain language of the policy, the notification, and the statutory definitions of export in section 2(18) of the Customs Act, 1962 and section 2(e) of the Foreign Trade (Development and Regulation) Act, 1992 means goods taken out of India. Deemed exports under paragraph 9.10 were treated as a separate concession for export obligation purposes and not as part of physical exports for calculating DTA entitlement. The Board circular of 07.04.2000 and the jurisdictional High Court ruling were followed, and the Supreme Court decision cited by the appellant was distinguished as dealing with a different issue.

Conclusion: Deemed exports cannot be counted for computing DTA sale entitlement under paragraph 9.9(b) and the amended Notification No. 2/95-C.E.; the disallowance of the appellant's claim was upheld.

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