Hi Prabin
With regard to the following
For Pulse Oximeter applications, you need to have AC as well as DC information of the signal. That is why we suggest to use the same offset cancellation DAC to limit the DC as 50% of the ADC's full scale. Yes, you are correct that the ratio of AC to DC will change once you subtract the DC. However you can use the information of the gain and DAC's setting to digitally restore the subtracted DC in your algorithm.
Regards,
Prabin