TMI Blog2011 (3) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... Jyoti Balasundaram, Dr. Chittaranjan Satapathy, JJ. REPRESENTED BY : S/Shri R. Raghavan and M. Kannan, Advocates, for the Appellant. Ms. Indira Sisupal, JDR, for the Respondent. [Order per : Chittaranjan Satapathy, Member (T)]. Heard both sides. 2. The appellant-EOU was eligible to effect sales in the Domestic Tariff Area (DTA) in terms of para 9.9(b) of the EXIM policy 1997-2002 upto 50% of the FOB value of exports subject to payment of applicable duties under Notification No. 2/95-C.E. dated 4-1-95 and subject to fulfilment of minimum NFEP. Paragraph 9.10 of the EXIM policy allows inclusion of certain supplies in the DTA to be counted towards fulfilment of export performance. Such supplies in the DTA are known as deemed exports. As regards the counting the value of deemed exports towards fulfilment of export performance under para 9.10 of the EXIM policy, the same is not in dispute. The dispute in this case relates to computation of DTA sale entitlement under para 9.9(b) of the EXIM policy which provides a limit of 50% of the FOB value of exports. It is the case of the appellants that exports under para 9.9(b) should include deemed exports whereas it is the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of exports specified in para 9.9(b) of the EXIM policy and in the third proviso to the Notification No. 2/95 only means physical exports and it cannot include sales in the DTA. She cites the Board s Circular F. No. 305/48/2000-FTT dated 7-4-2000 which makes it very clear that DTA sale entitlement would be upto 50% of FOB value of exports i.e. physical exports only. She further states that when this circular was challenged in the jurisdictional High Court in the case of BAPL Industries Ltd. v. Union of India - 2007 (211) E.L.T. 23 (Mad.), the Hon ble Madras High Court held that physical export and deemed export are different and that the impugned circular dated 7-4-2000 is not ultra vires the provisions of Foreign Trade (Development and Regulation) Act, 1992, EXIM policy or the Constitution of India. She also cites the decision of Mumbai Bench of the Tribunal in the case of Indoworth India Ltd. v. CCE, Nagpur - 2009 (247) E.L.T. 551 where the decisions cited by the learned counsel for the appellants have been considered and distinguished. She states that though the cited decision in the case of Indoworth India (supra) is only a stay order, it clearly notes that the issue taken to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amendment dated 31-3-1999 of the Exim Policy is the provision of para 9.9(b) of the said Policy has been changed and in place of the words 25% of the production in value terms , the words DTA sale upto 50% of FOB value of exports has been substituted. This new provision came into effect from 1-4-1999. 3. Though it is very clear that DTA sale entitlement of EOU/EPZ unit under paragraph 9.9(b) would be up to 50% of FOB value of exports (i.e. physical export only). It appears that in some cases EOU/EPZ units have been allowed DTA sale entitlement against deemed export effected under the provision of para 9.10 of the policy. As the clearances under para 9.9(b) are on payment of concessional duties, it is possible that this DTA entitlement might have been availed of by FOU/EPZ unit, resulting in loss of revenue. 4. In view of the above, I am directed to request you to review all the DTA clearances of EOU/EPZ units under your jurisdiction after 1-4-99 and initiate recovery proceedings in case, there is any short levy. This exercise may be done on priority and a report in the matter may be sent to the Board respectively by 25-4-2000. The letter dated 7-1-2005 fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50% of the free on board value of exports. The expression Free on Board or FOB is an international commercial term (Incoterm) which refers to an export consignment placed on board a vessel, ready to leave the domestic territory of a country. The expression export is defined under Section 2(18) of the Customs Act, 1962 as follows :- Exports , with its grammatical variations and cognate expressions means taking out of India to a place outside India. Section 2(e) of the Foreign Trade (Development Regulation) Act, 1992 defines import and export as follows :- Import and Export means respectively bringing into or taking out of India, any goods by land, sea or air. The definitions of Exports under the Customs Act, 1962 and under the Foreign Trade (Development Regulation) Act, 1992 are similar and both mean taking goods out of India. Hence, the expression 50% free on board value of export appearing in the EXIM policy and Notification 2/95 have to be taken as referring to physical exports out of India in the light of definitions of export given in the Foreign Trade (Development and Regulation) Act, 1992 and the Customs Act, 1962 respectively. When the plain langu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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