Re-imported goods duty and exemption treatment under customs law, with strict reading of the re-import notification and credit verification.

Goods exported under bond without payment of central excise duty and later re-imported for exhibition were held liable to customs duty on re-import under Section 20 of the Customs Act, with Notification No. 94/96-Cus. applied strictly to its express classification. The procedural reference to Rule 13 of the Central Excise Rules did not alter the re-import duty position. On the factual question of duplicate recovery, the demand could not stand if the goods had already been entered in stock and cleared on payment of duty, so verification was required. Modvat credit on duty-paid inputs used in manufacture was accepted in principle, subject to proof.

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Issues: (i) Whether goods exported under bond without payment of central excise duty and later re-imported for exhibition were entitled to exemption from customs duty under Notification No. 94/96-Cus.; (ii) Whether the demand could survive if the re-imported goods had already been accounted for in stock and whether Modvat credit was admissible on the duty paid inputs used in their manufacture.

Issue (i): Whether goods exported under bond without payment of central excise duty and later re-imported for exhibition were entitled to exemption from customs duty under Notification No. 94/96-Cus.

Analysis: Goods exported under bond without payment of duty fell within Sl. No. 1(d) of the Table to Notification No. 94/96-Cus., which specifically covered goods exported under bond without payment of central excise duty. The re-import of such goods was also governed by Section 20 of the Customs Act, 1962, which provides for duty on goods re-imported into India. The reference to Rule 13 of the Central Excise Rules, 1944 in Notification No. 263/79-CE was treated as procedural and did not convert the export into a duty-free clearance for all purposes.

Conclusion: The duty liability on re-import was upheld against the assessee.

Issue (ii): Whether the demand could survive if the re-imported goods had already been accounted for in stock and whether Modvat credit was admissible on the duty paid inputs used in their manufacture.

Analysis: If the re-imported goods had already been entered in the stock register and were also cleared from the factory on payment of duty, the same demand would result in double recovery and could not be sustained. That factual aspect required verification. The Modvat credit claim was also accepted in principle, subject to proof that the re-imported goods were duty paid and that the inputs used in manufacture had suffered duty.

Conclusion: The assessee was entitled to verification of the double-demand plea and could claim Modvat credit upon establishing the requisite duty-paid nature.

Final Conclusion: The main duty demand on re-import was sustained, while limited relief was granted on factual verification of double demand and on the availability of Modvat credit subject to proof.

Ratio Decidendi: Goods exported under bond without payment of central excise duty and re-imported into India are liable to customs duty under the re-import provisions and the relevant exemption notification must be applied strictly according to its express classification.

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