Preferential import exemption for polished marble slabs upheld where overseas processing and final manufacture were supported by evidence.

Preferential import exemption depended on whether the marble slabs were sufficiently processed in the exporting Contracting Party and whether the final manufacturing process occurred there. The record showed machinery and processing facilities in Sri Lanka, together with a detailed account of the polishing process undertaken there, supporting classification as polished marble slabs. Revenue's reliance on a statement about further polishing for use and on visual inspection was not backed by technical or trade opinion, and the record did not show that any post-import activity by the importer amounted to polishing. The goods were therefore treated as polished marble slabs eligible for the notification, and denial of exemption was unjustified.

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Issues: Whether the imported marble slabs were entitled to the benefit of the preferential import notification and whether denial of the exemption on the ground that the slabs were not completely polished and that the final process of manufacture was not performed in the exporting country was justified.

Analysis: The notification required that the products be worked on or processed so that the value of non-contracting-party materials did not exceed the prescribed limit and that the final process of manufacture be performed within the territory of the exporting Contracting Party. The evidence on record showed machinery and processing facilities in Sri Lanka and a detailed statement explaining the polishing process undertaken there. The Revenue relied mainly on a statement that some polishing was required for use and on visual inspection, but there was no technical or trade opinion supporting the view that the goods were not polished marble slabs. The record also did not show that any post-import process by the importer amounted to polishing. The prior High Court finding treating the goods as polished marble and not as manufactured in India supported the same factual conclusion.

Conclusion: The imported goods were held to be polished marble slabs and the assessee was found entitled to the benefit of the notification; denial of the exemption was unjustified.

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