Export Oriented Unit clearances to Domestic Tariff Area without permission remain taxable under the main excise charging provision.

SC interpreted the proviso to section 3(1) of the Central Excise Act, 1944 as applying only where Domestic Tariff Area sales by a 100% Export Oriented Unit are permitted under the export policy and authorised by the Development Commissioner. Where clearances were made into the Domestic Tariff Area without that permission, they were not sales "allowed to be sold in India" for the proviso and remained chargeable under the main charging provision. The Court followed the earlier construction of the provision and noted the consistent departmental circular. The duty liability was therefore under section 3(1), not the proviso.

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Issues: Whether excise duty on clearances made by a 100% Export Oriented Unit into the Domestic Tariff Area without approval of the Development Commissioner was chargeable under the main charging provision or under the proviso to section 3(1) of the Central Excise Act, 1944.

Analysis: The decisive expression in the proviso to section 3(1) is "allowed to be sold in India". That expression was understood to apply only where the Domestic Tariff Area sale was permitted under the export policy and the relevant administrative authorisation had been granted. Where the assessee cleared goods into the Domestic Tariff Area without the required permission of the Development Commissioner, the statutory condition for invoking the proviso was not satisfied. The Court followed the earlier interpretation that such unauthorised clearances remained chargeable under the main section 3(1), and noted the departmental circular clarifying the same position.

Conclusion: Duty on the impugned clearances was payable under section 3(1) of the Central Excise Act, 1944 and not under the proviso to that provision.

Final Conclusion: The revenue failed to dislodge the Tribunal's view on the principal duty liability, and the appeals were dismissed.

Ratio Decidendi: Clearances by a 100% Export Oriented Unit to the Domestic Tariff Area without the requisite permission are not sales "allowed to be sold in India" within the proviso to section 3(1) of the Central Excise Act, 1944, and are therefore assessable under the main charging provision.

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