Physical exports only for exemption threshold; deemed exports cannot be counted under the notification.

For Clause (b) of the 3rd proviso to Notification No. 2/95-C.E., the free on board value of exports was held to mean only physical exports out of India. Deemed exports permitted by the Development Commissioner could not be included because the notification used the term "export" in its ordinary sense and did not extend the exemption computation to deemed exports. Although DTA clearances may be allowed under the Exim Policy for policy purposes, entitlement to duty exemption had to be tested strictly on the notification's terms. The value limit was therefore to be computed only on physical exports, and the restriction was upheld.

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Issues: Whether, for the purpose of Clause (b) of the 3rd proviso to Notification No. 2/95-C.E., the expression relating to the free on board value of exports includes deemed exports permitted by the Development Commissioner, or is confined to physical exports out of India.

Analysis: The notification conditions exemption on satisfaction of customs authorities and links the permissible clearances to the free on board value of exports. The expression "export" was treated in its ordinary sense as taking goods out of India to a place outside India. Since the notification did not refer to deemed exports, the value of such deemed exports could not be added while computing the limit. The authority administering the Exim Policy may permit DTA clearances for policy purposes, but entitlement to duty exemption had to be tested strictly under the terms of the exemption notification issued by the Finance Ministry.

Conclusion: The value limit had to be computed only on the basis of physical exports, not deemed exports, and the restriction imposed by the adjudicating authority was upheld against the assessee.

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