Advance licence exemption for die steel extends to manufacture-related materials, even when not directly incorporated in export goods.

Imported die steel covered by a valid advance licence and exemption notification could not be denied duty-free clearance merely because it was used to make moulds rather than being directly incorporated in the export product. Once the licensing authority had granted the licence on the footing that the material was required for manufacture of the resultant export goods, Customs could not re-examine the licence entry or narrow the scope of the notification. The expression covering materials required for manufacture was wide enough to include the die steel, and treating it as capital goods outside the notification was unjustified. The assessee was therefore entitled to the exemption benefit.

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Issues: Whether die steel imported under a valid advance licence could be denied duty-free clearance by Customs on the ground that it was used for making moulds and not directly in the export product.

Analysis: The advance licence and the exemption notification treated die steel as a material required for manufacture of the resultant export product. Once the licensing authority had granted the licence on that basis and the licence remained valid and subsisting, Customs could not re-examine the correctness of the licence entry or insist that the imported material must be directly incorporated in the export goods. The expression covering materials required for manufacture was wide enough to include the imported die steel, and the authorities below were not justified in treating it as capital goods outside the notification.

Conclusion: The denial of duty-free clearance was unsustainable and the assessee was entitled to the benefit of the exemption notification.

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