Exemption notification benefit cannot be denied merely because a by-product emerges during manufacture when export conditions are met.

Exemption under Notification No. 43/2001-C.E. could not be denied merely because Soyabean oil emerged as a by-product in the manufacture of Soya De Oil Cake. The notification allowed procurement of inputs for export goods under bond on declaration of the input-output ratio, and it did not require every product generated during manufacture to be exported. As the notified export product was cleared in accordance with the notification and the export obligation was fulfilled, the exemption remained available and denial of the benefit was unsustainable.

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Issues: Whether the benefit of Notification No. 43/2001-C.E. dated 26-6-2001 could be denied on the ground that Soyabean oil, a by-product arising in the manufacture of Soya De Oil Cake, was not exported along with the export goods.

Analysis: The notification permitted procurement of inputs for manufacture of export goods under bond on declaration of the input-output ratio. It did not require that every product generated in the course of manufacture be exported. The prescribed norm for Soya De Oil Cake permitted duty-free import of Hexane, and the exported product was admittedly cleared in accordance with the notification. The mere emergence of Soyabean oil in the manufacturing process did not defeat the exemption when the export obligation in respect of the notified export product was fulfilled.

Conclusion: The benefit of the exemption notification was available to the respondent, and the denial of exemption was unsustainable.

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