DTA sale entitlement for 100% EOU cannot be reopened by Revenue when competent policy approval has fixed value-based authorization.

A 100% export-oriented unit's DTA sales, once authorised by the Development Commissioner under the Export-Import Policy 1997-2002, could not be re-examined by the Revenue by excluding deemed exports from the entitlement calculation. The Tribunal held that, where clearance was approved in value terms under the applicable policy and exemption procedure, Central Excise authorities could not substitute their own assessment for the competent authority's authorization. Revenue could therefore not restrict the admissible value of DTA clearances or raise duty demand on the footing that only actual physical exports were relevant.

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Issues: Whether, for a 100% export-oriented unit making clearances in the Domestic Tariff Area, the Revenue could ignore the permission granted by the Development Commissioner and restrict the admissible value of clearance on the footing that only actual physical exports, and not deemed exports, were relevant for determining entitlement and duty liability.

Analysis: The Tribunal held that the Development Commissioner, being the competent authority under the Export-Import Policy, had approved the DTA sale in terms of value after taking the relevant export entitlement into account. Once such permission was granted under Paragraph 9.9 of the Export-Import Policy 1997-2002 and the clearances were made under the applicable exemption notification and procedure, the Revenue could not go behind that authorization and reassess the admissible value by excluding deemed exports. The Tribunal followed earlier decisions taking the same view and rejected the contention that the Central Excise authorities could substitute their own assessment for the authorization issued by the competent authority.

Conclusion: The Revenue could not disallow the DTA clearances or demand duty on the basis that only physical exports were to be considered. The issue was decided in favour of the assessee.

Ratio Decidendi: Where a competent authority under the Export-Import Policy has authorized DTA sales by a 100% EOU in terms of value, the Revenue cannot ignore that authorization and independently reopen the entitlement by excluding deemed exports.

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