Licence coverage for intermediate inputs used in manufacture of export goods extends where there is a sufficient nexus with the exported product.

Import under REP and supplementary licences was treated as authorised where the licence permitted raw materials, components, consumables, spares and packing materials related to the exported goods, subject to actual user conditions. Dodecyl Benzene used for degreasing leather in footwear manufacture was held to have a sufficient nexus with the exported product, so the fact that it could also be used in detergent manufacture did not make the import unauthorised. On that basis, the confiscation and penalty were set aside and the goods were accepted as validly imported under the licence scheme.

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Issues: Whether Dodecyl Benzene imported under REP and supplementary licences was covered by the licence conditions as a raw material related to the exported product of footwear, and if the resultant confiscation and penalty were sustainable.

Analysis: The licences permitted import of raw materials, components, consumables, spares and packing materials related to the products exported, subject to the actual user condition. The imported material was used for degreasing leather in the course of footwear manufacture, and the expression "related to the goods exported" was read broadly enough to include such an input. On that basis, the import could not be treated as unauthorised merely because the item was also associated with detergent manufacture.

Conclusion: The import was covered by the licences and was not unauthorised; confiscation and penalty were set aside.

Final Conclusion: The appeals succeeded and the goods were held to have been validly imported under the licence scheme.

Ratio Decidendi: Where a licence authorises import of raw materials related to the exported product, an input used in an intermediate manufacturing step of that product is covered if there is a sufficient nexus with the export goods.

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