Target Plus Scheme eligibility turns on broad nexus and actual user conditions for imported palmolein oil

Imported RBD palmolein oil was examined for Target Plus Scheme eligibility on two points: whether it had a broad nexus with exported rice and wheat, and whether repacking the oil through supporting manufacturers satisfied the actual user condition. One view applied the wider product-group test under the Handbook of Procedures, holding that administrative circulars could not impose a narrower input-in-output requirement; on that reasoning, the nexus condition was met. The same view treated retail packing through supporting manufacturers as sufficient user of the goods, relying on the Foreign Trade Policy definition of manufacture rather than Central Excise manufacture. The Members differed on both issues, so the matter was referred to a Third Member and no final entitlement determination was made.

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Issues: (i) whether the imported RBD Palmolein oil could be treated as having a broad nexus with the exported rice and wheat for availing the Target Plus Scheme benefit; (ii) whether packing the imported oil into retail packs through supporting manufacturers satisfied the actual user condition.

Issue (i): whether the imported RBD Palmolein oil could be treated as having a broad nexus with the exported rice and wheat for availing the Target Plus Scheme benefit.

Analysis: One view held that the scheme and the exemption notification permitted import of freely importable inputs against duty credit certificates and that the broad nexus requirement in the Handbook of Procedures was satisfied if the imported and exported goods fell within the same product group. It was held that administrative circulars could not add a stricter condition requiring the imported item to be an input in the very exported product, and that the broad nexus test had to be applied with reference to the wider product group.

Conclusion: In that view, the imported palmolein oil and the exported rice and wheat were treated as having the requisite broad nexus, supporting the assessee.

Issue (ii): whether packing the imported oil into retail packs through supporting manufacturers satisfied the actual user condition.

Analysis: One view held that the notification did not require the supporting manufacturer's process to amount to manufacture under the Central Excise Act, and that the policy definition of manufacture in the Foreign Trade Policy was the relevant one. The conversion of bulk oil into retail packs through supporting manufacturers was treated as sufficient user of the goods for the purposes of the scheme.

Conclusion: In that view, the actual user condition was satisfied and the assessee was entitled to the exemption benefit.

Final Conclusion: The Members differed on the core eligibility questions under the Target Plus Scheme, and the matter was therefore required to be placed before a Third Member for resolution. No final determination on entitlement was reached in this order.

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