End-use verification governs customs exemption where imported bulk drug moves between owned manufacturing units without proof of manufacture use.

Exemption under Notification No. 21/2002-Cus. could not be denied merely because imported bulk drug was transferred from one owned manufacturing unit to another, where the transfer was intimated and receipt at the receiving unit was evidenced. The controlling requirement was actual use of the imported goods in the manufacture of the specified excisable goods, and there was no finding or evidence on that end use. The matter therefore required fresh verification of whether the goods were ultimately consumed in manufacture at the receiving unit.

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Issues: Whether exemption under Notification No. 21/2002-Cus. could be denied merely because the imported bulk drug was transferred from one manufacturing unit to another unit, and whether entitlement depended on verification of end use in the receiving unit.

Analysis: The demand arose only because the imported goods were moved from the Indrad unit to the Baddi unit. The transfer had been intimated to the jurisdictional officer, and a certificate showed receipt of the goods at Baddi. On the record, there was no finding or evidence on actual end use at the receiving unit. Since the notification required use of the imported goods in the manufacture of the specified excisable goods, the mere transfer of goods between owned units was held insufficient to deny exemption without verifying whether the goods were ultimately used in manufacture at Baddi.

Conclusion: Exemption could not be denied solely on the ground of inter-unit transfer, and the matter had to be verified on the question of end use; the case was sent back to the adjudicating authority for fresh determination.

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