Exemption for intended use survives marginal transit loss where imported furnace oil was not diverted

Marginal short-receipt of imported furnace oil during transit and unloading did not disentitle the assessee to exemption under Notification No. 21/2002-Cus. The shortage was attributed to pumping, transit and weighment differences, and there was no allegation or finding of diversion in the notice or orders. Applying the principle that "for use" means "intended for use," the quantity not physically received because of incidental loss could not be treated as diverted use. The shortfall was therefore to be ignored, the exemption remained available, and the duty demand was unsustainable.

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Issues: Whether minor short-receipt of imported furnace oil in transit and unloading, without any diversion, disentitled the assessee to exemption under Notification No. 21/2002-Cus. dated 01.03.2002.

Analysis: The quantity differences between the imported furnace oil and the quantity received in the factory were found to be marginal. The loss was attributed to pumping, transit and weighment differences. There was no allegation or finding of diversion in the show cause notice or in the impugned orders. Applying the principle that the expression "for use" is to be understood as "intended for use", the quantity actually not received due to such incidental loss could not be treated as diverted use. Since the exemption was denied only on the ground that the full quantity was not physically received, the notification could not be invoked to demand duty on the marginal loss in the absence of diversion.

Conclusion: The shortfall attributable to incidental loss was to be ignored and the exemption remained available; the demand was unsustainable.

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