Similarity of goods governs DTA clearance by 100% EOU, so concessional duty cannot be denied for functionally alike products.

For DTA clearance by a 100% EOU, the governing test under para 6.8(a) of the Foreign Trade Policy is whether the goods are similar to the exported or expected export goods, not whether they are identical. The article explains that similarity is assessed by commercial and functional likeness within the same broad product class. On the stated facts, tipper bodies cleared into DTA were treated as similar to exported open top containers and other transport containers, so denial of concessional duty under Notification No. 23/2003-C.E. was not justified and the notification benefit was available.

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Issues: Whether tipper bodies cleared into DTA by a 100% EOU were eligible for concessional duty under Notification No. 23/2003-C.E. on the footing that they were similar to the exported goods.

Analysis: The entitlement to DTA clearance turned on para 6.8(a) of the Foreign Trade Policy, which permits sale in DTA of products similar to the goods exported or expected to be exported. The expression used is "similar" and not "identical". The record showed that the appellant was permitted to clear containers and related products, while the exported goods included containers and the disputed DTA clearances were tipper bodies. Applying the earlier reasoning on similar goods, the decisive question was whether the DTA product and the export product shared like characteristics and function so as to fall within the same broad product class. On the facts, tipper bodies were held to be similar to the exported open top containers and other transport containers.

Conclusion: The denial of concessional duty was unsustainable and the appellant was entitled to the benefit of the notification.

Ratio Decidendi: For DTA sale by a 100% EOU, the statutory requirement is similarity of goods and not identity; where the DTA-cleared product is commercially and functionally similar to the export product, the benefit of the concessional notification cannot be denied.

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