DTA sale entitlement must credit permitted advance sales and count deemed exports; extended limitation fails without suppression.

Advance DTA sale permitted by the Development Commissioner had to be credited while quantifying any alleged excess DTA clearances, because entitlement could not be reworked as if that permission had never been granted. Deemed exports between 100% EOUs were to be treated as exports for FOB computation of DTA sale entitlement, and a departmental circular could not override that settled position. The extended limitation period was unavailable where the clearances were reflected in records and periodic disclosures, with no suppression or wilful misstatement shown. On that basis, the duty demand, penalties, and confiscation findings were unsustainable.

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Issues: (i) Whether the advance DTA sale already permitted by the Development Commissioner had to be adjusted while quantifying the alleged excess DTA clearances. (ii) Whether clearances treated as deemed exports could be included in FOB value of exports for computing DTA sale entitlement, and whether the demand for the earlier period was barred by limitation.

Issue (i): Whether the advance DTA sale already permitted by the Development Commissioner had to be adjusted while quantifying the alleged excess DTA clearances.

Analysis: The permission granted by the Development Commissioner allowed advance DTA sale to be adjusted against future entitlement. The quantification in the show cause notice and the adjudication order, to the extent they ignored that permission and reworked the entitlement as though the advance sale had not been granted, was inconsistent with the record and with the basis on which DTA entitlement had been determined.

Conclusion: The issue is decided in favour of the assessee; the alleged excess DTA clearance could not be computed without giving credit for the advance DTA sale already permitted.

Issue (ii): Whether clearances treated as deemed exports could be included in FOB value of exports for computing DTA sale entitlement, and whether the demand for the earlier period was barred by limitation.

Analysis: The Tribunal followed the settled position that deemed exports by one 100% EOU to another are to be treated on par with exports for computing DTA entitlement, and that the departmental circular could not override that position. On limitation, the records and periodic disclosures showed that the relevant clearances were available for verification, and the Tribunal found no suppression or wilful misstatement to justify the extended period.

Conclusion: The issue is decided in favour of the assessee; deemed exports were required to be counted for FOB computation, and the demand invoking the extended period was time-barred.

Final Conclusion: The duty demands, penalties, and confiscation findings could not be sustained, and the appeals succeeded with consequential relief.

Ratio Decidendi: For a 100% EOU, deemed exports are to be treated as exports for computing DTA sale entitlement, and the department cannot rework entitlement by ignoring the Development Commissioner's permission or invoke the extended period absent suppression or wilful misstatement.

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