Deemed exports count toward DTA clearance entitlement for a 100% EOU under the EXIM Policy, rejecting a physical-export-only view.

For computing a 100% export-oriented unit's entitlement to clear goods into the Domestic Tariff Area, deemed exports were held includible in the 50% FOB value base under paragraph 6.8 of the EXIM Policy 2002-2007. The analysis treated earlier binding High Court precedent as controlling and rejected the view that only physical exports could be counted. On that basis, denial of the entitlement, along with the related demand and penalties, was not sustainable, and consequential relief followed.

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Issues: Whether a 100% export-oriented unit was entitled to clear goods into the Domestic Tariff Area by computing 50% of FOB value on the basis of deemed exports, and whether denial of that entitlement for want of physical exports was sustainable.

Analysis: The entitlement under paragraph 6.8 of the EXIM Policy 2002-2007 was held to cover the value of deemed exports as well. The dispute was treated as covered by earlier decisions holding that physical exports alone could not be insisted upon for computing DTA clearance entitlement. The jurisdictional High Court decisions, which had upheld that view, were treated as binding and preferred over contrary authorities relied upon by the Revenue.

Conclusion: The appellant was eligible to clear goods into the Domestic Tariff Area by taking 50% of the FOB value including deemed exports, and the contrary demand and penalties could not be sustained.

Final Conclusion: The impugned order was unsustainable and the assessee's claim for consequential relief succeeded.

Ratio Decidendi: For computing DTA clearance entitlement of a 100% EOU under the EXIM Policy, deemed exports could not be excluded merely because they were not physical exports where binding precedent had accepted such inclusion.

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