Purposive construction of export exemption notifications extends "manufacture" beyond central excise meaning for EOU inputs.

An exemption notification aimed at promoting exports and foreign exchange earnings was construed purposively, so "manufacture" was not confined to the narrower meaning under central excise law. On that approach, the activities carried on in a 100% export-oriented unit, together with the approved import-export scheme and the treatment of the goods under the licence, brought the imported compact discs, jewel boxes and trays within the notification. The exemption was therefore available for goods used in the export manufacturing process, and the customs demand could not be sustained. The note also records that the broader interpretation was consistent with later circular guidance on a similar exemption.

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Issues: (i) Whether the activity undertaken in the 100% EOU amounted to manufacture for the purpose of Notification No. 13/81 so as to entitle the imported compact discs, jewel boxes and trays to exemption. (ii) Whether the duty demand was barred by limitation on account of alleged suppression of facts.

Issue (i): Whether the activity undertaken in the 100% EOU amounted to manufacture for the purpose of Notification No. 13/81 so as to entitle the imported compact discs, jewel boxes and trays to exemption.

Analysis: The object of the notification was to promote exports and earn foreign exchange, so the expression "manufacture" in that context could not be confined to the stricter meaning attached to Section 2(f) of the Central Excise Act. A broader, purposive construction was required. The approval granted by the Board of Approval, the disclosed import-export scheme, and the subsequent treatment of the goods established that the imports were for use in the export-oriented process contemplated by the licence and notification. The reasoning was also supported by the broader interpretative approach adopted in a later CBEC circular relating to a similar exemption.

Conclusion: The imported goods were used for manufacture of articles for export within the meaning of Notification No. 13/81, and the exemption was available.

Final Conclusion: The customs demand could not be sustained, and the appeal failed.

Ratio Decidendi: An exemption notification intended to promote exports must be construed purposively and broadly, and the term "manufacture" in such a notification is not necessarily confined to the technical meaning under central excise law.

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