Actual user exemption permits job work within the same manufacturing arrangement; prior permission lapse is only procedural.

DRI officers were recognised as competent proper officers for Section 28 of the Customs Act, so the jurisdictional objection to the show cause notice failed. Imported goods covered by an actual user exemption and used mainly in the importer's own manufacturing process could be sent to a sister concern for job work after fulfilment of the export obligation without breaching Notification No. 30/97-Cus.; such movement was treated as processing within the same manufacturing arrangement, not a prohibited transfer to another person. The absence of prior permission for job work was regarded as a procedural lapse only, and the duty demand and penalty were not sustainable.

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Issues: (i) Whether the show cause notice issued by officers of the Directorate of Revenue Intelligence lacked jurisdiction. (ii) Whether sending imported goods to a sister concern for job work after fulfilment of export obligation violated the actual user condition or Notification No. 30/97-Cus. and justified the confirmed duty and penalty.

Issue (i): Whether the show cause notice issued by officers of the Directorate of Revenue Intelligence lacked jurisdiction.

Analysis: The jurisdictional objection was examined in the light of the subsequent legal position recognised by the Supreme Court, which clarified that officers of the Directorate of Revenue Intelligence are competent proper officers for the purposes of Section 28 of the Customs Act, 1962. The earlier challenge based on absence of jurisdiction therefore no longer survived.

Conclusion: The objection to jurisdiction was rejected.

Issue (ii): Whether sending imported goods to a sister concern for job work after fulfilment of export obligation violated the actual user condition or Notification No. 30/97-Cus. and justified the confirmed duty and penalty.

Analysis: The imported material was found to have been substantially used in the appellants' own manufacturing activity and the balance sent to a sister concern for job work. The legal question was whether such movement amounted to a prohibited transfer or diversion under the notification. The Tribunal relied on the later legal position that an actual user industrial unit may have the imported goods processed through another unit or jobber, and that transfer between units of the same person for own use does not by itself amount to a transfer to another person. It was also held that absence of prior permission for such job work was, at most, a procedural lapse and not a substantive breach warranting denial of the exemption benefit.

Conclusion: The sending of goods for job work did not violate the notification, and the duty demand and penalty could not be sustained.

Final Conclusion: The appeal succeeded on merits, the jurisdictional challenge failed, and the demand and penalties arising from the alleged diversion and notification breach were set aside.

Ratio Decidendi: Where imported goods are covered by an actual user exemption and are sent for job work within the same person's manufacturing arrangement after export obligation is fulfilled, such movement does not constitute a prohibited transfer to another person, and non-obtaining of prior permission is only a procedural lapse unless the notification expressly makes it substantive.

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