No excise duty on in-process goods at debonding when exit policy does not expressly cover them.

In the absence of an express provision in the exit policy for a 100% export oriented unit, excise duty could not be demanded on in-process goods at the time of debonding. The policy covered imported and indigenous capital goods, raw materials, components, consumables, spares and finished goods in stock, but it did not include in-process goods. Following the earlier tribunal view that no authority existed to levy duty on such goods, the tribunal held that duty was not payable and the departmental challenge on this item failed.

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Issues: Whether excise duty was payable on in-process goods lying with a 100% export oriented unit at the time of exit from the scheme.

Analysis: The applicable policy contemplated payment of duty on imported and indigenous capital goods, raw materials, components, consumables, spares and finished goods in stock when an export oriented unit opted out of the scheme, but it did not refer to in-process goods. The earlier tribunal ruling holding that there was no authority to levy duty on in-process goods was followed, and no reason was found to depart from that view.

Conclusion: Duty was not payable on the in-process goods, and the departmental challenge to the relief granted on that item failed.

Ratio Decidendi: In the absence of an express provision covering in-process goods in the governing policy for exit from the export oriented unit scheme, duty cannot be demanded on such goods at the time of debonding.

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