Per V.K. Agrawal :

M/s. Ginni International Ltd. have filed this appeal being aggrieved with the Adjudication Order No. 42/2000 dated 26.12.2000 passed by the Commissioner, Central Excise confirming the demand of Central Excise duty and imposing penalty in respect of sales made to Domestic Tariff Area (DTA).

2. Shri V. Lakshmi Kumaran, learned Advocate, submitted that the Appellants, a 100% Export Oriented Undertaking (100% EOU in short) manufacture Cotton Yarn and Woven fabrics which, apart from being exported, are also sold in DTA to other E.O.Us; that as per para 9.10 of the Export Import Policy, 1997-2002, these supplies to other E.O.Us in D.T.A. are treated as deemed exports and the same are counted towards fulfillment of export performance by them; that para 9.9 (b) of the Exim Policy stipulates that EOU can sell upto 50% of FOB value of export in DTA; that on an application made by them, Development Commissioner, NEPZ granted them permission to sell goods in DTA to the extent of Rs. 998.38 lakhs for the quarter April-June, 1999 and Rs. 801.69 lakhs for the quarter July-September, 1999; that accordingly the Appellants after obtaining the permission from the Jurisdictional Deputy Commissioner, sold the goods in DTA during January and April 2000; that since the finished goods were manufactured out of wholly indigenous raw materials, they paid the excise duty in terms of Notification No. 8/97-C.E., dated 1.3.1997; that the Adjudicating Authority has confirmed the demand of duty and has imposed penalty on the ground that for the purpose of arriving at the DTA sale entitlement, only physical exports effected by them is to be taken into account and the deemed exports are to be ignored and accordingly benefit of Notification No. 8/97-C.E. is not available on the excess quantity removed by them to DTA.

3. The learned Counsel, further, submitted that all the clearance of the goods manufactured by the Appellants have been removed to the DTA on the basis of permission granted by the Development Commissioner who, as per EXIM Policy provisions, is the proper authority for granting such permission; that once such permission is obtained and the same is not cancelled, the validity of the clearances so effected cannot be questioned by the Central Excise Authorities; He relied upon the decision in the case of C.C.E., Indore Vs. Dhar Cements Ltd., 2000 (40) RLT 662=2000 (121) ELT 720 (T) wherein the Tribunal, while considering the availability of Notification No. 23/89-C.E. for mini cement plants whose licensed capacity did not exceed 200 tonnes per day, held that once the assessee produced proof of licensed capacity and further proof of any higher capacity having not been endorsed in their licence, it was not open to the Assistant Collector to deny the benefit of the Notification by substituting his own concepts for the expression "licensed capacity" in the Notification. The Learned Counsel also mentioned that Notification No. 8/97-CE merely requires that the goods should be "allowed" to be sold in India under and in accordance with the provisions of sub-paragraph (a), (b), (c), (d) and (f) of paragraph 9.9 or of paragraph 9.20 of the Exim Policy; that once the Development Commissioner has granted permission in terms of para 9.9 (b) of the Policy and other paragraphs of the Hand Book of Procedure & Guidelines, the pre condition for the availment of Notification 8/97 is satisfied; that the expression "FOB value of exports" appearing in para 9.9 (b) of the policy would cover within its ambit the deemed exports effected in terms of para 9.10 of the policy also.

4. The Learned Advocate referred to para 9.9 (b) of Policy which reads as under:

"DTA sales upto 50% of the FOB value of exports may be made subject to payment of applicable duties and fulfilment of minimum NFEP prescribed in Appendix 1 of the Policy."

He contended that the expression employed is "FOB value of exports" and not "FOB value of physical exports;" that the various other par