Warehoused goods cleared under an exemption notification were not denied relief merely because the warehousing facility was later withdrawn.

Warehoused excisable goods did not attract immediate duty merely because the warehousing facility was withdrawn, where the stock was later cleared to an export-oriented unit under an applicable exemption notification. CESTAT applied its earlier coordinate Bench view that a general exemption cannot be denied simply because the goods had previously remained in bond, and treated the case as covered by that principle. On that basis, the demand, interest and penalty were held unsustainable.

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Issues: Whether duty became immediately payable on petroleum products lying in warehouse when the warehousing facility was withdrawn, despite their subsequent removal to an export-oriented unit under an exemption notification.

Analysis: The Tribunal held that the goods were in warehouse when the warehousing facility was withdrawn and were later removed to an export-oriented unit without payment of duty under the relevant exemption notification. It applied its earlier coordinate Bench decision, which had taken the view that the benefit of a general exemption notification cannot be denied merely because the goods had earlier been under warehousing facility. The Tribunal treated the present matter as covered by that earlier reasoning and found no basis to sustain the demand, interest, or penalty.

Conclusion: Duty was not payable on the warehoused stock merely because the warehousing facility was withdrawn, and the demand was unsustainable.

Ratio Decidendi: Where warehoused excisable goods are subsequently cleared in terms of an applicable exemption notification, withdrawal of the warehousing facility by itself does not defeat the exemption or create an immediate duty liability.

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