Foreign Trade Policy interpretation must follow the competent authority's approval before restricting domestic tariff area clearances.

Where entitlement to domestic tariff area clearances for a hundred per cent export oriented unit depended on the Foreign Trade Policy, the Letter of Permission and the Development Commissioner's approval, revenue authorities could not construe the policy expression in isolation and substitute their own interpretation without first seeking clarification from the competent authority. The Tribunal found that the adjudicating authority had not adequately referred the matter to the authority that granted the approval. The impugned order was set aside and the matter remanded for fresh decision after appropriate reference, without finally determining the substantive entitlement.

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Issues: Whether the adjudicating authority could independently construe paragraph 6.8 of the Foreign Trade Policy and restrict the appellant's entitlement to clear goods in the domestic tariff area despite the Letter of Permission and the Development Commissioner's approval.

Analysis: The dispute turned on the meaning of the expression used in the Foreign Trade Policy and its interface with the exemption notification issued under section 5A of the Central Excise Act, 1944. The Tribunal noted that the appellant was a hundred per cent export oriented unit and that the entitlement to domestic clearances depended not merely on the notification but also on the policy framework and the approval granted by the Development Commissioner. It found that the customs authorities had approached the matter as if the expression could be interpreted solely within their own statutory vocabulary, without adequate reference to the Foreign Trade Policy or the basis on which the competent authority had granted approval. The Tribunal held that, where entitlement is linked to a permission granted by another statutory authority, the revenue authorities should not substitute their own interpretation without first seeking clarification from that authority.

Conclusion: The impugned order was set aside and the matter was remanded for fresh decision after appropriate reference, in effect favouring the assessee on the procedural challenge but without a final determination on the substantive entitlement.

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