Consumables under export exemption include trial-production inputs used to test custom-made moulds for marketable exports.

PET granules used for testing custom-made moulds in an export-oriented unit were treated as consumables under Notification No. 52/2003-Cus because the exemption scheme covers goods used in the manufacturing process, including items that do not form part of the final product but are necessary to make it marketable and exportable. Testing and trial production were held integral to manufacture, and no non-compliance with input-output norms or factual breach of the export scheme was established, so denial of exemption was unsustainable.

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Issues: Whether polyethylene (PET) granules used in testing of moulds manufactured by an export oriented unit qualified as eligible inputs or consumables for exemption under Notification No. 52/2003-Cus dated 31st March 2003.

Analysis: The exemption scheme for export oriented units is designed to cover all types of goods used in the manufacturing process, and the policy materials treat raw materials, components, consumables, intermediates, spares and packing materials as eligible inputs. The definition of consumables is broad enough to include goods that do not form part of the final product but are essential to making the final product acceptable to the customer. Since testing of custom-made moulds was necessary to ensure marketability and exportability, the PET granules used for such trial production were integral to the manufacturing process. The authorities also did not establish any non-compliance with standard input-output norms or any factual compromise of the export scheme.

Conclusion: The PET granules were consumables covered by the exemption, and denial of the benefit was unsustainable.

Ratio Decidendi: Goods used in testing or trial production of exportable custom-made goods, where such testing is necessary for marketability and export fulfilment, can qualify as consumables eligible for exemption under an export-oriented scheme.

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