End-use exemption for imported inputs survives inevitable manufacturing scrap where the goods are used in the specified process.

Imported coils used in the manufacture of electrolytic tinplates satisfied the exemption condition even though scrap was generated during the continuous process. The inevitable process loss did not mean that an equivalent quantity of inputs had remained unused, and exact input-output correlation was treated as technologically impracticable in this manufacturing context. Payment of duty on the scrap also supported the view that the imported inputs had been put to the intended end-use. On that basis, the exemption was not denied and no differential customs duty arose on the scrap-generated quantity of input.

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Issues: Whether generation of scrap during manufacture of electrolytic tinplates from imported TMBP coils meant that the corresponding quantity of inputs had not been used in manufacture, so as to attract differential customs duty under the exemption order.

Analysis: The exemption order required the imported coils to be used for manufacture of electrolytic tinplates and a declaration to that effect to be given. The generation of scrap during the continuous manufacturing process was found to be inevitable and did not establish that a corresponding quantity of input remained unused. Exact input-output correlation in such manufacture was treated as a technological impossibility, and the fact that duty had been paid on the scrap reinforced that the inputs had been put to the intended use.

Conclusion: The condition in the exemption order was satisfied and no differential customs duty was payable on the scrap-generated quantity of input.

Ratio Decidendi: Where imported inputs are indisputably put into the manufacturing process for the specified end-use, inevitable process loss or scrap does not justify treating an equal quantity of those inputs as not used for the exempted manufacture.

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