Conditional exemption for reimported goods failed where no proof of timely re-export or granted extension was shown.

Conditional exemption for reimported goods required re-export within the stipulated period, or within any extension granted by the Commissioner. Where the importer could not produce reliable evidence that the machine had been returned for repairs or that extension of time had been sought and allowed, the reimport was treated as outside the intended scope of the notification and as misuse of the exemption. The goods were therefore liable to confiscation and penalty. The penalty was upheld in principle, but the amount was reduced on the facts.

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Issues: Whether the appellant was liable to penalty for failure to re-export the reimported machine within the prescribed period under the exemption notification, and whether the quantum of penalty required reduction.

Analysis: The exemption on reimported goods was conditional upon re-export within the stipulated period or within any extended period granted by the Commissioner. The explanation that the machine had been returned by the foreign buyer for repairs was not supported by evidence, and no reliable proof was produced to show that extension of time had been sought or granted. On the material available, the reimport was treated as not falling within the intended scope of the notification, amounting to misuse of the exemption. The machine was therefore held liable to confiscation and the appellant liable to penalty.

Conclusion: Penalty was upheld in principle, but its amount was reduced from Rs. 2 lakhs to Rs. 1 lakh.

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