Deemed export clearances by a 100% EOU under the Exim Policy supported waiver of pre-deposit and stay of recovery.

Clearances by a 100% EOU to other EOUs against foreign exchange under paragraph 9.10(b) of the Exim Policy, 1997-2002 were treated as deemed exports and counted as export performance. On that basis, and relying on its earlier view that such supplies were not liable to duty, the Tribunal found a strong prima facie case for interim protection. Waiver of pre-deposit was granted and recovery of the demanded duties and penalties was stayed pending the appeals.

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Issues: Whether the applicants were entitled to waiver of pre-deposit and stay of recovery in appeals concerning duty and penalty on clearances made by a 100% EOU to other EOUs against payment in foreign exchange under paragraph 9.10(b) of the Exim Policy, 1997-2002.

Analysis: The clearances were made pursuant to permission of the Development Commissioner and were treated as export performance under paragraph 9.10(b). The order notes that such supplies, though not involving physical export, are treated as deemed exports and counted towards export performance. The Tribunal also noticed its earlier view that such clearances could not be subjected to duty. On that basis, and without entering final merits, the applicants were found to have established a strong prima facie case for interim relief.

Conclusion: Waiver of pre-deposit was granted and recovery of the demanded duties and penalties was stayed during the pendency of the appeals, in favour of the assessee.

Final Conclusion: The interim relief application succeeded on a prima facie assessment that the disputed clearances under the export policy deserved protection from immediate duty recovery pending disposal of the appeals.

Ratio Decidendi: Clearances by a 100% EOU made against foreign exchange under the relevant deeming export provision can furnish a strong prima facie basis for waiver of pre-deposit and stay of recovery.

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