Customs exemption for manufacture covers essential input materials, including indirect heating and cleaning agents used to produce finished goods.

Under the advance licence customs exemption, goods need not be physically consumed in manufacture if they are materials required for producing the resultant products. The notification distinguished between materials imported for manufacture and replenishment of materials used in manufacture, and that distinction was treated as material. On the facts, Dowtherm was needed for indirect heating in polymerisation, while tri ethylene glycol was needed to clean machinery and remove polymer residue so the finished products could be made to the required quality. Both were therefore essential to manufacture, and exemption was available; denial of the benefit was not sustainable.

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Issues: Whether Dowtherm and tri ethylene glycol imported under the advance licence scheme were entitled to exemption as materials required for the manufacture of the resultant products under the relevant customs notifications.

Analysis: The notification used two distinct expressions, namely, materials required to be imported for the purpose of manufacture of products and replenishment of materials used in the manufacture of the resultant products. The distinction between these expressions was material and the exemption was not confined only to goods actually consumed in the physical or chemical process of manufacture. On the evidence, Dowtherm was necessary to provide the indirect heating required for polymerisation, while TEG was necessary for cleaning the machinery and removing polymer residue so that the finished products could be produced with the required quality. Both goods were therefore essential for the manufacture of the finished products.

Conclusion: The goods qualified for exemption and the denial of benefit under the notifications was not sustainable.

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