Export treatment for EOUs and indigenous procurement rules were applied to uphold duty exemption under central excise law.

Clearances by an Export Oriented Unit into the domestic tariff area under paragraph 9.10(b) of the EXIM Policy 2002-2007, when made with Development Commissioner approval and against foreign exchange, were treated as exports for exemption from duty under Section 3 of the Central Excise Act, 1944 read with Notification No. 8/1997. Procurement of goods or raw material from another Export Oriented Unit was treated as indigenous procurement for the relevant purpose. The binding precedent on both questions was applied in favour of the assessee, and the appeals failed.

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Issues: (i) Whether goods cleared in domestic tariff area under paragraph 9.10(b) of the EXIM Policy 2002-2007, with permission of the Development Commissioner and payment in foreign exchange, could be treated as export so as to escape duty under Section 3 of the Central Excise Act, 1944 by virtue of Notification No. 8/1997; (ii) Whether purchase of goods or raw material from another Export Oriented Unit was to be treated as indigenous procurement.

Issue (i): Whether goods cleared in domestic tariff area under paragraph 9.10(b) of the EXIM Policy 2002-2007, with permission of the Development Commissioner and payment in foreign exchange, could be treated as export so as to escape duty under Section 3 of the Central Excise Act, 1944 by virtue of Notification No. 8/1997.

Analysis: The issue had already been covered by binding precedent holding that such clearances, made under the policy permission and against foreign exchange, were to be treated as export for the purpose of the exemption and duty liability.

Conclusion: The issue was answered in favour of the assessee.

Issue (ii): Whether purchase of goods or raw material from another Export Oriented Unit was to be treated as indigenous procurement.

Analysis: The question had also been settled by prior binding authority holding that procurement from another Export Oriented Unit was to be regarded as indigenous procurement for the relevant purpose.

Conclusion: The issue was answered in favour of the assessee.

Final Conclusion: The appeals were liable to be dismissed since both questions stood concluded against the Revenue and in favour of the assessee.

Ratio Decidendi: Clearances from an Export Oriented Unit made in accordance with the relevant policy permission and against foreign exchange may qualify as export for exemption from central excise duty, and procurement from another Export Oriented Unit is treated as indigenous procurement for that purpose.

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