Direct manufacturer supply required for EOU exemption; refund on bought-out goods was rejected as conditions were not met.

Benefit under Notification No. 1/95-C.E. for supplies to a 100% export oriented unit was confined to goods received directly from the manufacturer under the prescribed CT-3 procedure. As the supplier was not the manufacturer of the bought-out goods, the notification conditions were not met and the claim to treat the supply as deemed export or deemed manufacture failed. The Board Circular was inapplicable because it dealt with utilisation of Modvat credit on inputs exported as such under bond, which was a different factual and legal situation. The refund claim was therefore not maintainable and was rejected.

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Issues: Whether duty paid on bought-out goods supplied to a 100% export oriented unit was refundable to the supplier on the footing that the supply amounted to deemed export and deemed manufacture.

Analysis: Notification No. 1/95-C.E. governed the exemption and CT-3 procedure for supplies to a 100% export oriented unit. The notification required inputs and goods for export production to be received directly from the manufacturer. Since the appellant was not the manufacturer of the goods in question, the conditions of the notification were not satisfied. The reference to the Board Circular was inapplicable because it dealt with utilisation of Modvat credit on inputs exported as such under bond, which was a different situation.

Conclusion: The refund claim was not maintainable and was rightly rejected.

Ratio Decidendi: Benefit under Notification No. 1/95-C.E. for supplies to a 100% export oriented unit is available only when the goods are procured directly from the manufacturer in accordance with the prescribed procedure.

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