Liberal interpretation of manufacture sustained input duty exemption where SEZ goods were already accepted as manufactured products.

Goods cleared from a Special Economic Zone were treated as manufactured products for concessional excise purposes, and that accepted finding could not be contradicted to deny customs duty exemption on inputs used in their production. The Tribunal applied a liberal construction of "manufacture" in the export-oriented context and followed its earlier view and the Board circular relied upon. On that basis, the duty demand was held unsustainable, the impugned order was quashed, and the appeals succeeded.

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Issues: Whether the goods cleared from the Special Economic Zone were to be treated as manufactured goods for the purpose of concessional duty and whether denial of customs duty exemption on the inputs used in their production was sustainable.

Analysis: The adjudicating authority had itself accepted that the goods in question were manufactured products for the purpose of the concessional excise notification. Once that finding was recorded, denial of the customs duty exemption on the inputs used in producing the same goods was inconsistent. The expression "manufacture" was required to receive a liberal construction in the export-oriented context, in line with the Tribunal's earlier view and the Board circular relied upon.

Conclusion: The duty demand was not sustainable and was set aside in favour of the assessee.

Final Conclusion: The impugned order was quashed and the appeals succeeded.

Ratio Decidendi: Where the same goods are accepted as manufactured for one exemption notification, a contrary view cannot be adopted for denying related input exemption if the governing context requires a liberal interpretation of manufacture.

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