Broad reading of similar goods under DTA policy upheld, while regular disclosure defeated extended-period demand.

Paragraph 6.8(a) of the Foreign Trade Policy 2009-14 was read broadly to permit DTA sale of any product manufactured by an EOU producing more than one product, up to 90% of the FOB value of export of the specific products and within the overall 50% ceiling. Twisted yarn and rope were treated as similar goods because they belonged to the same broad product class, shared characteristics, composition and use, and were supported by the Development Commissioner's product grouping. On limitation, regular intimations and returns, together with departmental awareness of the clearances, negatived suppression or misdeclaration, so the extended period could not be invoked.

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Issues: (i) Whether twisted yarn and rope cleared in DTA could be treated as similar goods for the purpose of paragraph 6.8(a) of the Foreign Trade Policy 2009-14 and the concessional duty notification; (ii) Whether the demand was hit by limitation and the extended period could be invoked.

Issue (i): Whether twisted yarn and rope cleared in DTA could be treated as similar goods for the purpose of paragraph 6.8(a) of the Foreign Trade Policy 2009-14 and the concessional duty notification.

Analysis: Paragraph 6.8(a) permits DTA sale of goods up to the prescribed limit and, for units manufacturing more than one product, allows any of those products to be sold in DTA up to 90% of the FOB value of export of the specific products, subject to the overall 50% ceiling. The goods manufactured by the appellant were found to belong to the same broad product class, with similar characteristics, composition and use, and the Development Commissioner's permission and product grouping also supported that view. The expression "similar goods" was read broadly, not narrowly as identical goods, and the value of DTA clearances was held to be within the policy entitlement when viewed against the exported specific products taken as a whole.

Conclusion: The goods were held to be similar, and the appellant's DTA clearances were held to be within the entitlement under the policy. The demand on merits was unsustainable.

Issue (ii): Whether the demand was hit by limitation and the extended period could be invoked.

Analysis: The appellant had regularly filed intimations and returns, and the Development Commissioner as well as the jurisdictional central excise authorities were aware of the clearances. No suppression, misdeclaration or withholding of material facts was established. In these circumstances, the ingredients required for invoking the extended period were absent.

Conclusion: The extended period was held to be inapplicable, and the demand was barred to that extent.

Final Conclusion: The appeals succeeded, and the impugned demands were set aside with consequential relief.

Ratio Decidendi: For EOU units manufacturing more than one product, paragraph 6.8(a) permits DTA clearance of any such product up to 90% of the FOB value of export of the specific products, subject to the overall 50% limit, and the term "similar goods" must be construed broadly in light of the product class, characteristics and commercial interchangeability; regular disclosure to the authorities negatives extended-period allegations in the absence of suppression.

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