DTA entitlement for 100% EOU goods cannot be restricted by customs valuation concepts where FTP limits are not exceeded.

A 100% EOU was entitled to clear bearing housing machined into the DTA at concessional duty, because para 6.8(a) of the Foreign Trade Policy allowed DTA sale up to 50% of FOB value overall and, for units exporting more than one product, up to 90% of the FOB value of the specific product. The tribunal held that the customs valuation concept of "similar goods" could not govern the policy interpretation, and the appellant had not exceeded the applicable entitlement. The denial of concessional duty was therefore unjustified, and the demand, interest and penalty were unsustainable.

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Issues: Whether the appellant, a 100% EOU, was entitled to clear bearing housing machined into the DTA at concessional duty by treating it as similar goods within the export entitlement under para 6.8(a) of the Foreign Trade Policy 2009-2014, and whether the demand, interest and penalty were sustainable.

Analysis: The DTA sale provision permits sale of goods up to 50% of FOB value of exports, and where a unit manufactures and exports more than one product, any of those products may be sold in DTA up to 90% of the FOB value of the specific products, subject to the overall ceiling. The description in the green card placed the appellant's products within a broad automotive category, and the goods cleared in DTA were bearing housing machined. The tribunal held that the imported concept of 'similar goods' from customs valuation could not control the interpretation of the Foreign Trade Policy. It further found that the appellant had not exceeded the 50% overall entitlement and that the DTA clearance of bearing housing was within the permissible 90% limit for the specific exported product.

Conclusion: The denial of concessional duty was unjustified, and the demand, interest and penalty were unsustainable.

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