Exemption for transit loss of imported goods cannot be denied where accidental damage occurs without diversion or contrary intention.

Exemption under Notification No. 16/2000-Cus. could not be denied for crude palm oil lost in a tanker accident during transit from the port to the factory, because the loss was undisputed and there was no allegation of diversion or contrary intention. Goods imported for manufacture of vanaspati remained within the intended use for the notification, and accidental damage did not by itself defeat the benefit for the quantity lost in transit. The denial of exemption was therefore unsustainable, and consequential relief followed.

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Issues: Whether the benefit of Notification No. 16/2000-Cus. could be denied in respect of crude palm oil lost in an accident during transit from the port of importation to the factory, when the loss was not disputed and there was no allegation of diversion for any other purpose.

Analysis: The imported crude palm oil was intended for manufacture of vanaspati under the notification. A portion was lost in a tanker accident during transport, and this factual position was not controverted by the Revenue. The reasoning adopted was that the exemption could not be denied merely because the imported material became unusable due to accidental damage, where there was no allegation that the goods were diverted or that the importer lacked the intention to use them for the specified manufacture. The conclusion followed the principle applied in the cited Supreme Court decision on damaged imported components.

Conclusion: The benefit of the notification could not be denied for the quantity lost in transit, and the denial of exemption was unsustainable.

Final Conclusion: The impugned order was set aside and the appellant was held entitled to the consequential relief available in law.

Ratio Decidendi: Where imported goods meant for use in specified manufacture are accidentally damaged or lost in transit without any diversion or contrary intention, exemption under the relevant notification cannot be denied for that quantity.

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