Net Foreign Exchange computation allowed DTA clearances under Advance Authorisation; deleted exclusion clause and exit order mattered.

DTA clearances made against Advance Authorisation, where consideration was received in Indian currency, were treated as admissible for Net Foreign Exchange computation and export-obligation fulfilment because the monitoring guidelines included supplies under paragraph 6.9 of Chapter 6 of the Exim Policy. The clause relied on to exclude such clearances had been deleted from the Foreign Trade Policy with effect from 1 April 2006 and was not in force for the relevant period. The record also noted a final exit order for the unit, and no contrary provision was shown to disqualify the supplies. Accordingly, the demands and penalties could not be sustained.

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Issues: Whether clearances made in the Domestic Tariff Area against Advance Authorisation, where consideration was received in Indian currency, could be counted for fulfillment of export obligation and Net Foreign Exchange computation under the Foreign Trade Policy.

Analysis: The relevant guidelines for monitoring EOU/SEZ units provided that, while calculating Net Foreign Exchange, supplies made under paragraph 6.9 of Chapter 6 of the Exim Policy were to be included. The clause relied upon to exclude such clearances had been deleted in the Foreign Trade Policy effective from 1.4.2006 and was not in force during the period in dispute. The record also showed that the concerned monitoring authority had issued a final exit order in respect of the unit, and no contrary provision was shown to disqualify such supplies from NFE calculation.

Conclusion: Such DTA clearances were admissible for the purpose of calculating Net Foreign Exchange and fulfilling the export obligation, and the demands and penalties could not be sustained.

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