Duty-free input concession for export manufacture upheld despite incidental by-product generation in the process.

Duty-free procurement of Hexane under Notification No. 43/2001-CE(NT) read with the 2001 Rules remained available where Hexane was used to manufacture exported De-oiled Cake. The incidental and unavoidable emergence of Soyabean oil in the manufacturing process did not defeat the concession, because the scheme required use of inputs in export manufacture and did not require every by-product generated during the process to be exported. The revenue objection was rejected, and the duty-free benefit was upheld.

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Issues: Whether duty-free procurement of Hexane under Notification No. 43/2001-CE(NT) read with the Central Excise (Removal of goods at Concession rate of duty for manufacture of excisable goods) Rules, 2001 was unavailable merely because Soyabean oil arose incidentally during manufacture of the exported De-oiled Cake.

Analysis: The notification and rules permit duty-free procurement of inputs for use in the manufacture of export goods. The record showed that Hexane was used for manufacturing De-oiled Cake, which was exported, and that generation of Soyabean oil was unavoidable in the manufacturing process. There was no stipulation that every product generated during the process must itself be exported. The issue had also already been decided in the respondent's own case on the same reasoning.

Conclusion: The duty-free benefit was correctly availed, and the revenue's objection was rejected.

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