Customs duty on reusable packing containers cleared by a 100% EOU sustained under the exemption regime.

Empty MS barrels used as packing material for duty-free imported inputs in a 100% EOU were held liable to customs duty on clearance because the exemption regime permitted disposal of used packing material on payment of duty where the containers were suitable for repeated use. The Tribunal found that the barrels were capable of repeated use and that no evidence was produced to show otherwise, so the duty demand and interest were sustained. A ruling concerning a Domestic Tariff Area unit was treated as inapplicable because this case involved clearance by a 100% EOU under the exemption framework.

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Issues: Whether empty MS barrels used as packing material for duty-free imported inputs by a 100% Export Oriented Unit were liable to customs duty on clearance, and whether the appellants had shown that the barrels were not suitable for repeated use.

Analysis: The exemption under Notification No. 52/2003-Cus. and the corresponding Foreign Trade Policy provision permitted disposal of used packing material on payment of duty. The deciding factor was whether the emptied barrels were containers suitable for repeated use. The lower authorities found, and the Tribunal agreed, that the barrels were capable of repeated use and that no evidence had been produced to establish otherwise. The reliance placed on a decision concerning a Domestic Tariff Area unit was held inapplicable because the present case involved import-free goods cleared by a 100% EOU under the exemption regime.

Conclusion: The clearance of the empty barrels attracted customs duty and interest, and the challenge to the duty demand failed.

Final Conclusion: The appeal was rejected, with the duty demand and consequential liability sustained.

Ratio Decidendi: Where duty-free imported goods are packed in containers suitable for repeated use, a 100% EOU clearing such containers must discharge the duty prescribed by the exemption regime unless it proves that the containers were not capable of repeated use.

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