Free Trade Zone exemption extended to construction materials used in connection with export production under amended notification.

Excisable goods brought into a Free Trade Zone for use in setting up a factory shed were treated as eligible for exemption where they were used in connection with the production of export goods. Notification No. 272/79-C.E. originally covered goods used by industries in the zone for producing goods intended solely for export, and Notification No. 12/81-C.E. widened that wording to include goods used "in connection with the production of goods." On that reading, asbestos sheets used for construction of the shed fell within the exemption, and the later Notification No. 11/85-C.E. was viewed as confirming the same position. The denial of exemption was therefore unsustainable.

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Issues: Whether asbestos sheets cleared into Kandla Free Trade Zone for construction of a factory shed, and used in connection with the production of goods meant for export, were eligible for exemption under Notification No. 272/79-C.E. as amended.

Analysis: Notification No. 272/79-C.E. exempted excisable goods brought into the Free Trade Zone for use by industries there for production of goods intended solely for export. Notification No. 12/81-C.E. amended the notification by substituting the words "or in connection with the production of goods", thereby widening its coverage. On this basis, the goods supplied and used for construction of the factory shed in the Free Trade Zone were treated as goods used in connection with the manufacture of export goods. The later amendment by Notification No. 11/85-C.E. was regarded as supporting the same interpretation as a clarificatory change.

Conclusion: The goods were covered by the exemption notification and the denial of benefit was unsustainable.

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