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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether clearances by a 100% EOU under para 9.10(b) of the EXIM Policy against foreign exchange were entitled to exemption under Notification No. 2/95-CE.
Analysis: The clearances in question were not covered by the full exemption notification applicable to 100% EOUs when goods are allowed to be sold in India, and the policy distinction between DTA sales under para 9.9 and supplies under para 9.10(b) did not by itself exclude the benefit of Notification No. 2/95-CE. The controlling principle applied was that exemption notifications must be construed strictly, but once the Supreme Court had held that DTA sales against foreign exchange fall within the expression "allowed to be sold in India" and are at par with physical exports for the purpose of Notification No. 2/95-CE, the same benefit could not be denied to such clearances.
Conclusion: The appellant was entitled to the benefit of Notification No. 2/95-CE dated 04.01.1995.
Ratio Decidendi: DTA clearances by a 100% EOU against foreign exchange, when permitted under the EXIM Policy, are to be treated as covered by the expression "allowed to be sold in India" for the purpose of Notification No. 2/95-CE and cannot be denied the concessional exemption available to comparable DTA sales.
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