Export exemption for intermediate goods survives job work processing where the goods are ultimately used in export production.

Intermediate goods used in export production may be cleared without payment of duty under the export exemption notification even where substantial processing is done through job work. Rule 13 of the Central Excise Rules and the related notification were intended to allow removal of duty-unpaid goods for export manufacture and to avoid adding duty-related costs to exported goods. Because the final products were admittedly exported and the Board's clarification supported that position, the exemption could not be denied merely on the ground that the exporters did not themselves perform all manufacturing processes.

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Issues: Whether intermediate goods obtained for export production could be cleared without payment of duty under the export exemption notification even though most manufacturing processes were carried out through job work and not by the exporters themselves.

Analysis: Rule 13 of the Central Excise Rules enabled export in bond of goods on which duty had not been paid. The notification issued under that rule was intended to permit removal of intermediate goods without duty for use in export production and to avoid making export goods costlier by duty incidence and related financial burdens. The fact that the final goods were exported was not in dispute, and the Board's clarification supported the exporter's position. Since the intermediate goods were used in export production, the exemption could not be denied merely because the processing was undertaken partly through job work.

Conclusion: The exporters were entitled to the benefit of the notification and the Revenue's appeals had no substance.

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