Advance DTA sales under export policy cannot by themselves defeat concessional exemption where exports are only expected later.

A 100% EOU granted advance DTA sale permission under the Export and Import Policy could not be denied concessional duty relief under Notification No. 2/95-C.E. merely because actual exports and NFEP targets had not yet been achieved. The notification had to be read harmoniously with the policy and Appendix 14F, which permitted advance DTA sales against anticipated export entitlement, subject to later adjustment and bond security for the duty differential. Since prior exports were not a precondition for DTA clearance, the exemption could not be refused at that stage on the basis that export-linked conditions were allegedly unfulfilled.

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Issues: Whether a 100% EOU granted advance DTA sale permission under the Export and Import Policy could be denied the concessional duty exemption under Notification No. 2/95-C.E. on the ground that exports and NFEP targets had not yet been achieved, and on the premise that the conditions in the notification stood violated before exports took place.

Analysis: The notification exempted goods manufactured in a 100% EOU and cleared in accordance with paragraph 6.8 of the Export and Import Policy from duty in excess of 50% of the customs duties leviable on like imported goods. The policy and Appendix 14F contemplated advance DTA sales against exports envisaged in the first year, with adjustment against subsequent entitlements and execution of a bond to secure the duty differential. The condition in the notification referring to goods exported or expected to be exported showed that prior exports were not a precondition to DTA clearance, and the stage for testing similarity of goods exported and home-consumed, or for examining compliance with the related balance-production condition, had not yet arisen when advance permission was granted.

Conclusion: The denial of the concessional exemption was unsustainable, and the appellants were entitled to the benefit of Notification No. 2/95-C.E.

Ratio Decidendi: Where the applicable export policy expressly permits advance DTA sales against anticipated export entitlement, exemption conditions tied to exports expected to be made must be construed in harmony with that policy, and the concessional notification cannot be denied merely because actual exports have not yet occurred.

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