ORDER
Gowri Shankar, Member (T)
1. The applicant manufactured polyester yarn in its 100% export oriented unit and sold part of its production in the domestic tariff area (DTA for short). In the order impugned in the appeal, the Commissioner has demanded customs duty of Rs. 6,48,139/-and excise duty of Rs. 43,97,978/-. He has also imposed penalty equal to the duty under the Customs Act and Central Excise Act.
2. The custom duty has been demanded by denying the benefit of Notification 53/97 in accordance with which the applicant had not paid duty on the capital goods and raw materials imported by it. The excise duty has been demanded by denying the benefit of exemption contained in Notification 1/95, which provides the same exemption from excise duty to locally manufactured goods as that of Notification 53/97. The benefit of Notification 2/95 which provides partial exemption from excise duty on the goods manufactured inter alia in 100% export oriented unit and sold in the DTA has also been denied. The basis for the denial of these notifications is the Commissioner’s finding that the quantity that the applicant sold in the DTA ought to have been calculated on the basis of which actual physical exports; in point of fact, the applicant did not export anything physically, and the quantity has been based on its deemed exports, consisting of sales against foreign exchange within the country.
3. The contention of the Counsel for the applicant is that the provisions in paragraph 9.10 of the policy contemplate in deciding the value of exports, including the value of the “deemed exports” also. He relies upon the decision of the Tribunal in Virlon Textile Mills v. CCE [2002 (139) E.L.T. 371 (T)] (Appeal E/3528/2000) in support of this proposition. He, further, contends that the sales made in pursuance of the permission granted by the Development Commissioner having jurisdiction while applying for permission he did not inform that the exports were only deemed exports. The department has no authority to question this finding of the Development Commissioner. He relies upon the decision of the Tribunal in Ginni International Ltd. v. CCE [2002 (139) E.L.T. 172 (T)] (Appeal E/494/2001) in support.
4. The departmental representative reiterates the finding that the applicant did not communicate to the Development Commissioner the fact that its exports were not physical but only “deemed exports”. The policy here is that domestic sales can only be calculated against physical exports.
5. The application made to the Development Commissioner for sale in the DTA mentions clearly that the total value of the goods sold to the DTA, which it shows to be identical to the cumulative exports. The decision of the Tribunal in Ginni International Ltd. that the department is bound by the terms of permission of the Development Commissioner, prima facie comes to the applicant’s help.
6. Accordingly, we waive deposit of the duty demanded and penalty imposed and stay their recovery.