Advance licence exemption requires nexus between imported materials and export product; transferability alone does not secure the benefit.

Under Notification No. 203/92-Cus., a transferee under an advance licence must still show that the imported materials are required for manufacture of the export product; transferability of the licence alone does not confer exemption. The majority view was that stamping foils could not qualify merely because the licence was transferable or the goods were broadly described as such, and the transferee failed to establish a direct nexus with the manufacture of gents shoe uppers. The dissent considered transferability sufficient and rejected any further nexus requirement. On the facts stated, the exemption was denied.

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Issues: Whether imported stamping foils were entitled to exemption under Notification No. 203/92-Cus. against a transferred advance licence and whether the transferee had to establish a nexus between the imported materials and the export product.

Analysis: The majority held that, even where an advance licence had become transferable, the transferee could claim the notification only if the imported materials answered the description of materials required for manufacture of the export product. The exemption was not available merely because the licence was transferable or because the goods were broadly described as stamping foils. On the facts, the transferee did not establish that the imported foils were capable of direct use in the manufacture of gents shoe uppers, and the relevant supporting material was not satisfactorily produced. The dissenting view treated transferability of the licence as sufficient and held that no further nexus was required.

Conclusion: The exemption was denied and the appeal failed.

Final Conclusion: A transferee under the advance licence scheme must satisfy the requirement that the imported materials are for use in the manufacture of the export product, and transferability by itself does not secure the benefit of the notification.

Ratio Decidendi: Under Notification No. 203/92-Cus., eligibility of a transferee importer depends on the imported materials being required for manufacture of the export product, and transferability of the licence does not dispense with that substantive condition.

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