Replacement goods policy benefit applies where defective handsets are re-exported and returned goods meet procedural conditions.

CESTAT, New Delhi held that replacement wireless handsets returned by a foreign supplier satisfied para 2.42 of the Handbook of Procedures under the Export and Import Policy 2004-09, because the original goods were re-exported as defective items, the replacement was of the same model, the shipment was made within the prescribed time, and no unauthorised remittance was made. On those facts, the replacement-goods facility was available, so the basis for confiscation under Section 111(d) did not survive. The confiscation and penalty were accordingly set aside.

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Issues: Whether the appellant was entitled to the benefit of para 2.42 of the Handbook of Procedures of Export and Import Policy 2004-09 in respect of replacement wireless handsets returned by the foreign supplier, and whether confiscation and penalty could be sustained.

Analysis: The imported handsets were re-exported as defective goods for replacement, and the goods received back were described as the same model. The replacement was supplied free of charge, the shipment was made within the prescribed time, and no remittance was made by the importer except what was permitted under the policy. On these facts, the conditions for availing the replacement-goods facility were satisfied. Once the import fell within para 2.42, the basis for confiscation under Section 111(d) did not survive.

Conclusion: The appellant was entitled to the policy benefit, and the confiscation and penalty were set aside.

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