Circular No. 303/19/97-CX dated 11/3/97

Subject: Difficulties in clearance of intermediate goods duty free for use in export goods where said intermediate goods and the export goods are manufactured within the same factory.

Representations have been received by the Board stating that the facility of duty free clearances of the intermediate goods for the manufacture of export goods are being denied on the ground that Chapter X procedures comprising of inter alia, namely-inbond manufacture of export goods, maintenance of separate storage/accountal, etc. could not be followed by a unit manufacturing intermediate goods and the export goods in the same unit.

2. Issue has been examined by the Board.

3. Board had clarified vide its circular No. 229/63/96-CX dated 8.7.1995 that merely because certain provisions of Chapter X viz. generation of CT-3 cannot be followed in cases of intermediate goods which are being manufactured within the factory premises for the manufacture of export goods, the facility of clearance of said intermediate goods without payment of duty cannot be taken away.

4. It is observed that provisions of Chapter X procedure are applicable mainly to the cases where intermediate goods are obtained from outside and the requirement of issue of CT-3 certificate, execution of Bond, separate storage / accountal of receipt and disposal of such intermediate goods are with a view to ensure their use for specified purpose.

5. Keeping in mind that Chapter X procedures cannot be followed mutatis mutandis where intermediate goods and export goods are manufactured in the same factory and also that denial of duty free clearance will cause undue hardship to exporters. Board is of the view that duty free clearance of intermediate goods under the provisions of Rule 13 should not be denied merely on the ground that Chapter X procedure could not be followed subject to the conditions that the Assistant Commissioners of Central Excise are satisfied from the documents/records available with the manufacturer exporter that the intermediate goods cleared for the manufacture of export goods have been used for the said purpose only.

6. The aforesaid instructions are being issued as the export facilitation measure and should be followed scrupulously so that the exporters are not put to undue hardship.

7. Pending cases may be disposed of accordingly.

Sd/-
(I.P. Lal)
Secretary Central Board of Excise and Customs

F.No. 209/14/96-CX.6

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