Free Trade Zone exemption requires specific Board-approved import authority; implied coverage for plant-fabrication inputs is rejected.

Import exemption for a Free Trade Zone unit was available only where the goods were specifically authorised under the Board-approved licence. A thyristor converter system for a temper mill was not shown to be included in the approved list, and a Development Commissioner's recommendation could not replace Board approval; the notification benefit was therefore unavailable and the goods were liable to confiscation. Ceramic wool for a bright annealing furnace was likewise not specifically approved, so exemption was denied. Special steel plates and other raw material imported to fabricate furnace components were treated as inputs for plant fabrication rather than goods directly covered by the notification, and were also outside the exemption.

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Issues: (i) Whether the thyrister converter system imported for the temper mill was covered by the approval granted by the Board and eligible for exemption under Notification No. 77/80. (ii) Whether the ceramic wool imported for the bright annealing furnace was covered by the approval and entitled to the notification benefit. (iii) Whether the special steel plates and other raw material imported for fabrication of furnace components were covered by the approval and eligible for exemption under the notification.

Issue (i): Whether the thyrister converter system imported for the temper mill was covered by the approval granted by the Board and eligible for exemption under Notification No. 77/80.

Analysis: The approval for import had to be traced to the Board under the Free Trade Zone policy, and the notification could operate only where the import was in accordance with the licence. The converter was new, was not shown to have been specifically included in the approved list, and the reasoning that it formed part of a second-hand temper mill was found insufficient. The Development Commissioner's recommendation could not substitute for the Board's approval.

Conclusion: The thyrister converter system was not covered by the approval, was imported without licence authority, and was liable to confiscation without the benefit of Notification No. 77/80.

Issue (ii): Whether the ceramic wool imported for the bright annealing furnace was covered by the approval and entitled to the notification benefit.

Analysis: Even accepting that the ceramic wool was a consumable refractory material used for lining the furnace, it was not shown to have been specifically approved for import. The notification required import under the licence and did not permit relaxation of that condition merely because the goods were intended for use in export production.

Conclusion: The ceramic wool was not entitled to the benefit of Notification No. 77/80 and was treated as liable to confiscation, though confiscation was not directed for this item.

Issue (iii): Whether the special steel plates and other raw material imported for fabrication of furnace components were covered by the approval and eligible for exemption under the notification.

Analysis: The words of the notification covered goods directly used in production or in auxiliary stages connected with production and packaging, but not raw material imported to fabricate machinery or plant to be used later in the zone. Extending the notification to such inputs would render the Board approval requirement redundant and was inconsistent with the annexure to the notification.

Conclusion: The special steel plates and similar raw material were not covered by the approval or by Notification No. 77/80 and were liable to confiscation.

Final Conclusion: The departmental appeal succeeded on the principal question of eligibility for exemption and confiscability, while the matter was sent back only for reconsideration of redemption fine and penalty.

Ratio Decidendi: Import exemption for a Free Trade Zone unit is available only when the goods are specifically authorised under the Board-approved licence, and the notification cannot be extended by implication to goods or inputs used to fabricate plant or machinery for later use in production.

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