2011 (9) TMI 360 - GUJARAT HIGH COURT

Allowability of refund of Cenvat credit availed on inputs used in the manufacture of goods cleared by DTA unit to a 100% Export Oriented Unit - Held that:- Reliance placed on judgement of High Court in COMMR. OF CENTRAL EXCISE Versus SHILPA COPPER WIRE INDUSTRIES (2010 -TMI - 205858 - GUJARAT HIGH COURT) and Ginni International Ltd.(2001 -TMI - 50798 - CEGAT, COURT NO. IV, NEW DELHI) - once Development Commissioner giving permission to the appellant, a 100% EOU, to sell goods in DTA up to a specified value, Revenue cannot go beyond the permission and dispute it holding that for fixing the limit only physical exports and not deemed exports should have been taken into account. Thus clearances made by one 100% EOU to another 100% EOU which are "deemed exports" are to be treated as physical exports for the purpose of entitling refund of unutilized Cenvat credit contemplated under the provisions of Rule 5 of the Cenvat Credit Rule, 2004.

Apex Court in the case of Virlon Textile Mills Ltd. v. Commissioner of C.Ex. Mumbai, 2007 (2007 -TMI - 1260 - SUPREME COURT OF INDIA), though not in identical situation while examining the nature of DTA sales to 100% export oriented units observed that DTA sales against foreign exchange or other supplies in India can be equated with physical exports. - The appeal of revenue is dismissed.