Duty-free import benefit sustained where contracts and records proved export obligation compliance through NEPZ-linked consultancy earnings.

The assessee was entitled to retain the benefit of duty-free import under Notification No. 339/85-Cus. because the evidence showed compliance with the export obligation. The Tribunal held that the remand direction required a substantive examination of the contracts and related records to see whether consultancy earnings and software-related services could be correlated with the unit at NEPZ. Contracts, project profiles, an affidavit, a chartered accountant's certificate and bank remittance records together established that the imported systems and software were used in performing the contracts, and that the earnings were sufficiently attributable to the NEPZ unit. The Commissioner's rejection on technical objections was therefore not justified.

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Issues: Whether the assessee had discharged the export obligation under Notification No. 339/85-Cus. by producing contracts, project profiles, affidavits and supporting records showing that consultancy earnings and software-related services were attributable to the unit at NEPZ, so as to justify retention of the benefit of duty-free import.

Analysis: The Tribunal held that the earlier remand required the adjudicating authority to examine the details of the contracts and ascertain whether the earnings from consultancy services could be correlated with the goods installed at NEPZ. On the material produced, the Tribunal found that the Commissioner had read the direction too narrowly by rejecting documents on technical objections instead of testing their substance. The contracts, project profiles, affidavit of the Vice President, chartered accountant's certificate, and bank remittance records collectively showed that the imported systems and software installed in NEPZ were used in the performance of contracts and consultancy work, and that the earnings were sufficiently established. The Tribunal also noted that the evidence supported the location-wise attribution of exports and consultancy receipts, and that the Commissioner's conclusion of failure to establish correlation was not justified on the record.

Conclusion: The assessee succeeded in proving compliance with the conditions for duty-free import and was entitled to the benefit of the notification.

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