Customs exemption for job work remains available where limited indigenous inputs do not alter the character of the export-manufacturing activity.

Use of indigenous raw materials in a manufacturing process did not, on the stated facts, take the activity outside job work or jobbing for purposes of Notification No. 32/97-Cus. The Board circular was applied to read the exemption broadly, and the appellate authority found that the indigenous inputs were only a small proportion in value terms while the imports were used in execution of export orders by way of jobbing. On that basis, the denial of customs exemption was unjustified and the respondent remained entitled to the notification benefit.

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Issues: Whether the benefit of Notification No. 32/97-Cus could be denied on the ground that the respondent used indigenous raw materials in the manufacturing process, and whether such use took the activity out of job work or jobbing.

Analysis: The notification granted exemption subject to the specified conditions for imports used in execution of export orders by way of jobbing. The Board circular clarified that use of indigenous materials would not by itself take the process outside job work or jobbing, and that a broad view should be taken. The appellate authority had found that the indigenous inputs were only a small proportion in value terms and had applied the circular and the relevant understanding of job work to hold that the activity remained within the notification. No new ground was raised by the Revenue to dislodge that finding.

Conclusion: The denial of exemption was not justified, and the respondent remained entitled to the benefit of Notification No. 32/97-Cus. The Revenue appeal failed.

Final Conclusion: The Tribunal upheld the appellate authority's view that the presence of indigenous materials did not, on the facts, disentitle the respondent from the claimed customs exemption.

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