Export under bond is not duty exemption, so captive inputs retained Notification 217/86-C.E. benefit

Goods exported under bond under Rule 30 of the Central Excise Rules were treated as not exempted from duty for purposes of Notification No. 217/86-C.E.; on that basis, captive lead used in manufacturing grey oxide and electric storage batteries did not lose the notification benefit. The controlling view was that export without duty payment does not, by itself, amount to exemption from duty where the final product is exported under bond. The departmental objection therefore failed, and the notification benefit remained admissible.

---

---

Issues: Whether goods exported under bond could be treated as exempted from duty for the purpose of denying the benefit of Notification No. 217/86-C.E. to lead used captively in the manufacture of grey oxide and electric storage batteries.

Analysis: The condition in the notification turned on whether the final product was exempted from duty. The appellate authority had relied on decisions taking the view that export without payment of duty did not amount to exemption, while the department invoked authority suggesting a contrary position. The controlling view adopted was that goods exported under bond under Rule 30 are not to be treated as exempted from duty, and the export of the batteries therefore did not defeat the notification benefit.

Conclusion: The benefit of Notification No. 217/86-C.E. was admissible and the departmental objection failed.

Final Conclusion: The appeal was rejected because export under bond did not amount to exemption from duty for the purpose of the notification condition.

Ratio Decidendi: Goods exported under bond under Rule 30 of the Central Excise Rules are not regarded as exempted from duty, and such export does not by itself disqualify the assessee from a notification benefit conditioned on the final product not being exempt.

---