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Issues: (i) Whether FOB value of deemed exports is liable to be added to physical exports for determining DTA sales entitlement; (ii) Whether goods can be sold or cleared in DTA by more than 90% of the FOB value of export of a particular product; (iii) Whether goods sold by the appellant in DTA are similar to those exported by it, or whether any goods were cleared only in DTA; (iv) Whether extended period was rightly invoked for demanding duty for the larger period.
Issue (i): Whether FOB value of deemed exports is liable to be added to physical exports for determining DTA sales entitlement?
Analysis: The entitlement under the relevant Foreign Trade Policy was examined in the light of prior decisions holding that deemed exports form part of the FOB value for computing DTA sale entitlement. The entitlement had to be rechecked with reference to the practice adopted by the Development Commissioner and the policy position applicable during the relevant period.
Conclusion: The issue was answered in favour of the assessee, and the matter was required to be reconsidered on that basis.
Issue (ii): Whether goods can be sold or cleared in DTA by more than 90% of the FOB value of export of a particular product?
Analysis: The policy was read as permitting DTA sale of any specific product up to 90% of the FOB value of export of that product, provided the overall DTA entitlement of 50% of FOB value of exports is not exceeded. The factual position as to whether this limit was breached for any specific product required fresh verification.
Conclusion: The issue was not finally decided on merits and was remitted for fresh determination.
Issue (iii): Whether goods sold by the appellant in DTA are similar to those exported by it, or whether any goods were cleared only in DTA?
Analysis: The question of similarity was held to be fact-sensitive and technical in the context of pharmaceutical products. The comparison was directed to be made on composition, use, trade or proprietary name, and other relevant technical parameters, with the assessee permitted to support its case by accepted pharmacopoeias or product-patent based material.
Conclusion: The issue was left for reconsideration by the adjudicating authority.
Issue (iv): Whether extended period was rightly invoked for demanding duty for the larger period?
Analysis: The returns and periodic intimations filed by the assessee did not disclose the detailed questions of similarity, entitlement, and carried-forward balance that surfaced only upon audit scrutiny. On that basis, the earlier finding that the suppression-based extended period was invocable was accepted.
Conclusion: The invocation of extended period was upheld.
Final Conclusion: The appeal succeeded only to the extent that the matter was sent back for fresh adjudication of the entitlement and product-similarity questions, while the finding on limitation was sustained.
Ratio Decidendi: In computing EOU DTA sale entitlement, deemed exports may be relevant to FOB value, product-wise 90% limits operate subject to the overall entitlement cap, and product similarity in pharmaceutical goods must be determined on technical parameters; failure to disclose relevant entitlement facts in returns may justify extended limitation.
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