Duty-free clearance for furnace oil used in manufacture remained available despite a later textile-boiler entry.

Furnace oil used by a 100% export oriented unit to generate steam for the distillation process remained eligible for duty-free clearance under Notification No. 1/95-C.E. The later insertion of a specific entry for furnace oil used in textile boilers did not displace the broader entitlement covering raw materials and consumables used in manufacture of exported final products. On a plain reading of the notification, and in light of its export promotion purpose, the specific textile entry was treated as additional rather than restrictive. The duty demand was therefore not sustainable where the furnace oil was actually received and used in the factory in connection with manufacture.

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Issues: Whether furnace oil used by a 100% export oriented unit to generate steam for the distillation process was eligible for duty-free clearance under Notification No. 1/95-C.E. despite the 15-9-1998 amendment introducing a specific entry for furnace oil used in textile boilers, and whether the duty demand could be sustained.

Analysis: The amendment by Notification No. 31/98 added a specific entry for furnace oil used in textile boilers, but it did not take away the existing entitlement under the entries covering raw materials and consumables. Furnace oil was actually received and used in the factory in connection with manufacture of the exported final products, and the steam generated from it was essential for the distillation process. On the plain reading of the notification, and keeping in view the beneficial nature of an export promotion exemption, the product continued to fall within the broader entries for raw material and consumable. The specific textile entry did not curtail the earlier entitlement for non-textile units, and the demand could not be upheld on the ground that the appellants were required to satisfy only the textile-specific entry.

Conclusion: The furnace oil was eligible for duty-free clearance under the notification, and the duty demand was not sustainable.

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