Exemption conditions and proof of utilisation: importer's failure to keep records sustained duty demand and penalties.

Exemption under Notification No. 140/91-Cus. was available only if the imported consumables were used for the specified software development purpose and the importer could show compliance through proper records and proof of utilisation within the permitted period. A bare affidavit asserting use of the toner cartridges was not enough because no contemporaneous records, evidence of consumption, or proof of extension of the warehousing period was produced. The burden to establish satisfaction of the notification conditions rested on the importer, and mere assertion did not discharge it. As a result, the exemption was denied and the duty demand and penalties were upheld.

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Issues: Whether the benefit of exemption under Notification No. 140/91-Cus. could be denied for failure to maintain records and produce proof of utilisation of the imported toner cartridges, and whether the duty demand and penalties were justified.

Analysis: The exemption was conditional upon the imported consumables being used for the specified software development purpose and the importer satisfying that condition by maintaining and producing records showing utilisation within the permitted period. The only support offered was an affidavit asserting use of the goods; no contemporaneous records, evidence of consumption, or proof of extension of the warehousing period was produced. The burden to establish fulfilment of the notification conditions lay on the importer, and mere assertion was insufficient to discharge that burden.

Conclusion: The conditions of the exemption notification were not proved to have been satisfied, so the duty demand and penalties were upheld against the assessee.

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