Lawful re-export under Export Oriented Unit scheme bars further duty demand when exit conditions are not shown breached.

Imported capital goods re-exported in original packed condition, with permission from the competent development authority and jurisdictional excise authorities, did not attract continuing customs duty liability where the Department failed to establish breach of the conditions for exit from the Export Oriented Unit scheme under Para 6.18(e) of the Foreign Trade Policy, 2004-2009. On those facts, the demand for duty, interest and penalty was unsustainable, and the proceedings were dropped in favour of the assessee. The record contained no contrary evidence to dislodge the findings that lawful re-export had been completed and the scheme conditions had not been shown to be violated.

---

---

Issues: Whether the duty demand, interest and penalty on imported capital goods survived after the unit was permitted to re-export the goods and to exit the Export Oriented Unit scheme.

Analysis: The unit had been permitted by the competent development authority and the jurisdictional excise authorities to re-export the imported capital goods. The record also showed that the goods were re-exported in original packed condition under the prescribed customs and central excise procedure. The Commissioner found that the Department failed to establish non-fulfilment of the conditions for exit from the Export Oriented Unit scheme under Para 6.18(e) of the Foreign Trade Policy, 2004-2009 and that the imported goods, having been re-exported as permitted, did not attract continuing duty liability. No contrary evidence was produced to dislodge those findings.

Conclusion: The duty demand, interest and penalty were unsustainable and the dismissal of the proceedings was upheld in favour of the assessee.

Final Conclusion: The appeal was rejected and the order dropping the proceedings was sustained, as the permitted re-export and compliance with the applicable export-oriented unit requirements negated further customs duty liability.

Ratio Decidendi: Where imported capital goods under an Export Oriented Unit scheme are lawfully permitted for re-export and the conditions for exit from the scheme are not shown to have been breached, no further duty demand survives.

---