Job-work compliance under customs exemption rules can satisfy the manufacturing condition for duty-free import of export inputs.

Notification No. 32/97-Cus. was applied to allow duty-free import of raw materials for export-oriented manufacture under a job-work arrangement. The prescribed manufacturing condition was treated as satisfied where the registered job-worker, acting on behalf of the importer, complied with the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. The act of the duly constituted agent was treated as the act of the principal, so the importer was not denied exemption merely because it did not itself manufacture the export goods. The exemption benefit was upheld and the Revenue's challenge failed.

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Issues: Whether the benefit of Notification No. 32/97-Cus. could be denied to the importer on the ground that the importer itself did not manufacture the export goods, when the manufacture was carried out by a registered job-worker following the prescribed procedure.

Analysis: The exemption notification was meant to facilitate duty-free import of raw materials for manufacture of export goods under the job work arrangement. The condition requiring manufacture in accordance with the prescribed procedure was held to be satisfied when the job-worker, acting on behalf of the importer, complied with the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. The act of the duly constituted agent was treated as the act of the principal, and the object of the notification was given effect to in a manner consistent with the export promotion scheme.

Conclusion: The condition in the notification was complied with by the importer through the job-worker, and the benefit of exemption was rightly granted; the Revenue's challenge failed.

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