Duty on returned export goods not payable merely on re-entry; liability arises only on fresh factory clearance.

Goods cleared without duty for export under Rule 13 of the Central Excise Rules, 1944, and later returned to the factory when export did not take place, were not liable to duty merely because they came back under D-3 declarations. The Tribunal treated the export clearance and subsequent re-entry of the same goods as insufficient to sustain a duty demand on the returned quantity. It held that duty would arise only when such goods are cleared again from the factory in the ordinary course. The duty demand on the returned export goods was therefore not sustainable.

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Issues: Whether duty could be demanded on goods cleared without payment of duty for export under Rule 13 of the Central Excise Rules, 1944, when the goods were not exported and were brought back to the factory under D-3 declarations.

Analysis: Goods cleared for export under Rule 13, but later returned to the factory because export did not take place, could not be subjected to duty merely because they came back after the period referred to by the Revenue. The Tribunal treated the clearance for export and the subsequent return of the same goods under D-3 declaration as sufficient to deny the duty demand on the returned quantity. It further observed that duty would become payable when such goods are cleared again from the factory in the ordinary course.

Conclusion: The demand of duty on the returned export goods was not sustainable.

Final Conclusion: The Revenue's challenge failed and the order sustaining relief to the assessee was upheld.

Ratio Decidendi: Goods cleared without duty for export under Rule 13, and later brought back to the factory as unexported goods under proper declaration, are not liable to duty merely on account of their return; duty arises only upon a fresh clearance from the factory.

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