Target Plus Scheme benefit upheld where imported and exported goods shared the same product group and no stricter input-link was required.

Under the Target Plus Scheme, import of RBD palmolein oil against export of rice and wheat was held eligible for duty credit certificate benefits under Notification No. 32/2005-Cus. Broad nexus was satisfied because the imported and exported goods fell within the same product group, and later circulars could not impose a narrower requirement that the imported goods be physically used as inputs in the exported product. The alleged actual user or manufacture objection also failed, as the notification did not require Central Excise-style manufacture and the policy recognised processing such as re-packing. The scheme benefit could not therefore be denied.

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Issues: (i) whether import of RBD palmolein oil against export of rice and wheat was entitled to the Target Plus Scheme benefit under Notification No. 32/2005-Cus.; (ii) whether the condition of broad nexus between imported and exported goods was satisfied; and (iii) whether denial of benefit on the basis of the alleged actual user or manufacture requirement was sustainable.

Issue (i): whether import of RBD palmolein oil against export of rice and wheat was entitled to the Target Plus Scheme benefit under Notification No. 32/2005-Cus.

Analysis: The exemption under Notification No. 32/2005-Cus. was linked to duty credit certificates issued under the Target Plus Scheme. The governing policy permitted import of freely importable inputs for own use, while the Handbook of Procedures introduced a broad nexus requirement. The majority held that the scheme had to be interpreted in light of its export incentive objective and the relevant product-group based norms.

Conclusion: The import was held to be eligible for the scheme benefit, in favour of the assessee.

Issue (ii): whether the condition of broad nexus between imported and exported goods was satisfied.

Analysis: The majority relied on the prior and binding understanding of broad nexus as referring to the same product group and held that the imported and exported items both fell within the food products group. It was held that the later circulars could not curtail the scheme by adding a stricter requirement that the imported goods must be inputs in the very exported product. The dissenting view held that the link between rice and wheat on one hand and palmolein oil on the other was insufficient, but that view did not prevail.

Conclusion: Broad nexus was held to be satisfied, in favour of the assessee.

Issue (iii): whether denial of benefit on the basis of the alleged actual user or manufacture requirement was sustainable.

Analysis: The majority held that the notification did not impose a separate condition that processing by supporting manufacturers must amount to manufacture under the Central Excise regime. It further held that the policy definition of manufacture, which includes processes such as re-packing, was applicable and that the oil was processed into retail packs by supporting manufacturers. The additional restriction introduced by the adjudicating authority was therefore unsustainable.

Conclusion: The actual user objection was rejected, in favour of the assessee.

Final Conclusion: The scheme benefit could not be denied on the facts of the case, and the impugned order did not survive.

Ratio Decidendi: For the Target Plus Scheme, broad nexus is satisfied where the imported and exported goods fall within the same product group, and an administrative circular cannot impose a stricter condition requiring the imported goods to be inputs physically used in the exported product.

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