Duty-free clearance to export-oriented units survives valid CT-3 certification and re-warehousing despite buyer approval lapse.

Duty-free clearance to a 100% export-oriented unit remained valid where the supplier removed a diesel generating set against a duly issued CT-3 certificate and the re-warehousing certificate was endorsed by the competent excise officer. The omission, if any, by the buyer-unit to obtain Board of Approvals approval under Notification No. 1/95-C.E. was treated as the buyer's issue and did not defeat the supplier's exemption when the prescribed procedural requirements had been complied with. On that basis, the duty demand against the supplier was held not sustainable and was set aside, with consequential relief.

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Issues: Whether excise duty could be demanded from the supplier of a diesel generating set cleared to a 100% export-oriented unit against a valid CT-3 certificate and re-warehousing documents, merely because the buyer-unit had not obtained approval from the Board of Approvals under Notification No. 1/95-C.E. dated 4-1-1995.

Analysis: The clearance was made against a CT-3 certificate issued by the jurisdictional Central Excise officer at the buyer's end, and the appellant's jurisdictional officer permitted duty-free removal on that basis. The re-warehousing certificate was also endorsed by the officer at the buyer's end. Any omission by the buyer in obtaining Board approval was a matter for action against the buyer and did not invalidate the appellant's clearance when all prescribed procedural requirements for duty-free removal had been complied with.

Conclusion: The duty demand against the appellant was not sustainable and was set aside.

Final Conclusion: The appeal succeeded and the assessee obtained consequential relief.

Ratio Decidendi: Where duty-free clearance to an export-oriented unit is authorised by the competent excise officer on valid certification and re-warehousing is duly completed, the supplier cannot be denied exemption or fastened with duty merely because the buyer allegedly failed to secure the internal approval required of the buyer-unit.

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