Deemed exports count toward DTA entitlement, while repeated cess on third-time DTA clearances was held unsustainable.

Deemed exports supplied to EOUs were treated at par with physical exports for computing the permissible DTA sales limit under the export incentive scheme, so the value of deemed exports had to be included in the export turnover for DTA sale entitlement. The Tribunal also held that education cess and secondary and higher education cess could not be levied again on third-time DTA clearances, as the later view on cess liability had been approved by higher courts and displaced the contrary approach. Relief was therefore granted to the assessee on both issues.

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Issues: (i) Whether, for computing the permissible limit of DTA sales under the export incentive scheme, the value of deemed exports was to be treated as export along with physical exports; (ii) whether education cess and secondary & higher education cess were chargeable for the third time on DTA clearances.

Issue (i): Whether, for computing the permissible limit of DTA sales under the export incentive scheme, the value of deemed exports was to be treated as export along with physical exports.

Analysis: The entitlement for DTA sales was examined on the basis of the export policy and the treatment of deemed exports vis-a -vis physical exports. The Tribunal followed earlier authority holding that deemed exports supplied to EOUs are to be taken at par with physical exports for determining the DTA sale ceiling, and noted that the later view supporting this position had also been affirmed higher up.

Conclusion: The value of deemed exports had to be included while computing the export value for DTA sale entitlement, in favour of the assessee.

Issue (ii): Whether education cess and secondary & higher education cess were chargeable for the third time on DTA clearances.

Analysis: The Tribunal noted that the Commissioner (Appeals) had relied on an earlier view, but a subsequent decision had taken a different view and that later view had been approved by the High Court and maintained by the Supreme Court. On that basis, the contrary view could not survive.

Conclusion: The additional cess demand on the third-time DTA clearance was not sustainable, in favour of the assessee.

Final Conclusion: The appeal succeeded on both issues and the impugned order was modified to grant relief to the assessee.

Ratio Decidendi: Deemed exports are to be treated as exports for computing DTA sale entitlement where the governing export scheme and binding precedent so require, and a later approved view prevails on the cess liability issue.

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