Transferable import licence and export obligation exemption: Customs cannot demand fresh proof of nexus where the licence was validly transferred.

A transferable import licence validly issued after discharge of the export obligation supported duty-free clearance under Notification No. 80 of 1995, and Customs could not insist on fresh proof of a close nexus between the imported inputs and the goods used in the export product. The notification was read with the licensing scheme and contemporaneous departmental materials, and it did not require minute identity or exact matching of quality, specification, or denierage. Once the competent authority had examined and transferred the licence and the imported goods were covered by it, the exemption could not be denied on the ground that nexus had not been re-established.

---

---

Issues: Whether a transferee of a validly transferred import licence, after export obligation had been fulfilled, could be denied exemption under Notification No. 80 of 1995 on the ground that the Customs had not established a close nexus between the imported inputs and the goods used in the export product.

Analysis: The exemption under Notification No. 80 of 1995 was read in the context of the licensing scheme, the transferability of the licence after satisfaction of export obligation, and the departmental understanding reflected in contemporaneous circulars and conference minutes. The notification did not require minute identity or exact tallying of quality, specification, or denierage with the exported product in the manner urged by the Department. Once the licence had been examined and transferred by the competent authority, and the imported goods were covered by that licence, the Customs could not insist on proving afresh the nexus between the inputs and the export product. The authorities relied upon by the Department were distinguished as arising under different notifications or factual situations.

Conclusion: The Customs could not require the respondents to re-establish the nexus between the imported goods and the goods used for manufacture of the export products, and the exemption could not be denied on that basis.

Final Conclusion: The departmental challenge failed, and the order granting relief to the importers was left undisturbed.

Ratio Decidendi: Where a transferable licence has been validly issued after discharge of export obligation, and the governing exemption notification does not insist on exact identity of the imported inputs with the exported goods, Customs cannot deny duty-free benefit by demanding re-establishment of a close nexus between the two.

---