Export-oriented unit clearances without permission fall under the main excise charging provision, not the proviso.

For pre-amendment clearances by a 100% export-oriented unit, the proviso to Section 3(1) of the Central Excise Act applied only where goods were lawfully permitted to be sold in India under the export-import policy and related framework. Clearances made without the Development Commissioner's authorisation did not fall within that proviso merely because the manufacturer was a 100% EOU. The goods were therefore assessable under the main charging provision of Section 3(1), and the contrary Tribunal view was reversed, with duty to be recomputed on that basis.

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Issues: Whether excisable goods manufactured by a 100% Export Oriented Unit and cleared into the Domestic Tariff Area without requisite permission were assessable under the main charging provision of Section 3(1) of the Central Excise Act, 1944 or under its proviso.

Analysis: The Court examined the pre-amendment text of Section 3(1) and the meaning of the expression "allowed to be sold in India". It held that the proviso applied only where the goods of a 100% EOU were lawfully permitted to be sold in India in terms of the export-import policy and the relevant statutory framework. The Court relied on the earlier interpretation that permission to debond a unit was different from permission to sell in India, and that clearances made without the Development Commissioner's authorisation did not attract the proviso merely because the manufacturer was a 100% EOU. The Court also held that the later contrary view of the Tribunal could not stand in light of the binding interpretation already declared and followed in later Supreme Court authority.

Conclusion: The goods were liable to duty under the main Section 3(1) of the Central Excise Act, 1944, and not under the proviso.

Final Conclusion: The Tribunal's view was reversed, the adjudication order was set aside, and the duty liability was directed to be recomputed on the footing that the clearances fell under the main charging provision.

Ratio Decidendi: For pre-amendment clearances by a 100% EOU, the proviso to Section 3(1) applies only to sales lawfully allowed in India under the applicable export-import scheme, and goods removed without such permission are assessable under the main charging section.

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