DTA sale entitlement under EXIM policy could include deemed exports, and later denial was unsustainable.

DTA sale entitlement under Para 9.9(b) of the EXIM Policy 1997-2002 was to be computed without excluding deemed exports where the policy and application format did not draw that distinction at the relevant time. The Court noted that DTA sales against foreign exchange had been treated on par with physical exports for concessional duty purposes, and a later administrative clarification could not defeat an entitlement already worked out and implemented. A show cause notice and subsequent permission-review action issued after the arrangement had been acted upon and after a long lapse of time were therefore unsustainable on merits, and the demand and review orders could not stand.

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Issues: Whether DTA sale entitlement under Para 9.9(b) of the EXIM Policy 1997-2002 could be computed by including deemed exports, and whether the subsequent attempt to deny that benefit after the permission had been acted upon could be sustained.

Analysis: Para 9.9(b) permitted DTA sale up to 50% of the FOB value of exports, and the application format and surrounding policy framework did not draw an explicit distinction between physical exports and deemed exports at the relevant time. The Court also relied on the earlier principle that DTA sales against foreign exchange were treated on par with physical exports for the purposes of concessional duty, and that the later administrative clarification could not displace the entitlement already worked out and implemented. On that basis, the challenge raised through the show cause notice, after a long lapse of time and after the permission had been operated, was not sustainable on merits.

Conclusion: The respondent's entitlement could not be restricted by excluding deemed exports in the facts of the case, and the impugned demand and permission-review orders were unsustainable.

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