Customs exemption based on a valid eligibility certificate was not undermined by later cancellation absent fraud.

Exemption under Notification No. 51/96-Cus. was claimed on clearance against a valid eligibility certificate issued by Jawahar Lal Nehru University, and the document states that the later cancellation of that certificate was not shown to arise from fraud in its procurement. On that basis, the exemption claim was treated as properly made at the time of clearance, and the subsequent cancellation did not, at the prima facie stage, justify duty recovery or confiscation. The impugned order was therefore stayed and recovery remained suspended until disposal of the appeal.

---

---

Issues: Whether exemption under Notification No. 51/96-Cus. could be denied and duty recovery and confiscation sustained solely because the eligibility certificate was subsequently cancelled, when the exemption had been availed on production of a valid certificate at the time of clearance.

Analysis: The appellant had cleared the goods on the basis of a valid eligibility certificate issued by Jawahar Lal Nehru University and had already deposited a substantial amount. The cancellation of the certificate was not shown to be founded on fraud in procurement of the certificate. On these facts, the claim to exemption had been correctly made at the time of clearance and the subsequent cancellation did not, at the prima facie stage, justify recovery.

Outcome: Stay of recovery was granted and operation of the impugned order was stayed till disposal of the appeal.

---