In a recent and important decision Apex Court has held that:

"When the goods are cleared with the permission of the Development Commissioner, then only proviso to section 3(1) of the CE Act, would be applicable".

"When there is a removal to DTA without permission of the competent authority, duty is leviable under main section 3 of the CE Act, 1944"

For full text of judgment visit:

COMMISSIONER OF CENTRAL EXCISE Versus M/S NCC BLUE WATER PRODUCTS LTD. [2010 -TMI - 77633 - Supreme Court of India]

And Section 3 of the Central Excise Tariff Act, 1944 (as amended)

Permission for DTA clearance governs duty: approved EOU removals attract customs duty, unapproved removals attract excise duty. Where 100% EOU goods are cleared to DTA with the permission of the Development Commissioner, the proviso to the central excise charging provision applies and duty is payable as customs duty; removals to DTA without such permission attract liability under the main charging provision and are subject to normal excise duty.