Alternative input replenishment under duty-free import schemes is allowed when the licence and notification conditions are satisfied.

Under Notification No. 30/97-Cus., replenishment against discharge of export obligation may be made with any permitted alternative input where the import-export scheme allows either coking coal or metallurgical coke (LAM coke) for the relevant export product. A valid licence, compliance with input-output norms, and absence of diversion or breach of notification conditions are critical to the entitlement. The more beneficial notification may be applied where its terms are satisfied, and the replenishment import of LAM coke is not barred merely because coking coal was originally contemplated.

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Issues: Whether, under Notification No. 30/97-Cus., the assessee was entitled to replenish coking coal by importing LAM coke after discharge of export obligation.

Analysis: The allowed import entitlement under the import-export policy covered either coking coal or metallurgical coke (LAM coke) as alternative inputs for the relevant export products. The imported LAM coke was covered by a valid licence and the department did not establish violation of the standard input-output norms, diversion of the imported goods, or breach of the notification conditions. The expression relating to replenishment of "such material" was treated as encompassing either of the permitted inputs, and the choice of the more beneficial notification was held to be permissible.

Conclusion: The assessee was entitled to import LAM coke in replenishment and no violation of Notification No. 30/97-Cus. was made out.

Ratio Decidendi: Where a duty-free scheme permits alternative inputs for the same export obligation, replenishment can be made with any permitted input so long as the import is under a valid licence and there is no breach of the notification conditions or diversion of the goods.

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