Post-export sale after discharge of export obligation can support exemption and defeat extended limitation at pre-deposit stage

Where imported goods are sold in the domestic market only after full discharge of export obligation, and the exemption notification does not expressly require prior permission or prior issuance of an EODC before such disposal, a prima facie case for exemption can be made out at the pre-deposit stage. On that basis, complete waiver of pre-deposit and stay of recovery may follow pending appeal. The document also notes that where the customs bond has already been cancelled and the facts do not support the pleaded basis for longer recovery, the extended period of limitation is not invokable at the interim stage.

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Issues: Whether the appellants were entitled to waiver of pre-deposit on a prima facie showing that the conditions of Notification No. 40/2006-Cus dated 01.05.2006 were complied with after discharge of export obligation; and whether the extended period of limitation was invokable in the facts of the case.

Issue (i): Whether the appellants were entitled to waiver of pre-deposit on a prima facie showing that the conditions of Notification No. 40/2006-Cus dated 01.05.2006 were complied with after discharge of export obligation.

Analysis: The imported goods were sold in the domestic market only after the export obligation had been discharged. The notification was read as not imposing a condition that prior permission from the licensing authority or prior issuance of EODC was necessary before disposal of the goods after full discharge of export obligation. On that basis, the appellants established a prima facie case that the exemption benefit was available.

Conclusion: The appellants were entitled to complete waiver of pre-deposit and stay of recovery during the pendency of the appeals.

Issue (ii): Whether the extended period of limitation was invokable in the facts of the case.

Analysis: The bond executed against the duty free import authorisation had already been cancelled by the Customs authorities, and the record did not support invocation of the extended period on the pleaded facts. In the circumstances, the demand was not treated as one warranting extended limitation at the interim stage.

Conclusion: The extended period of limitation was held not invokable.

Final Conclusion: The appellants secured interim relief against pre-deposit and recovery, and the appeals were directed to be listed for final hearing.

Ratio Decidendi: Where goods imported under an exemption notification are disposed of only after discharge of export obligation, and the notification does not expressly require prior licensing authority permission for such post-discharge sale, a prima facie case for exemption and against invocation of extended limitation is made out at the stage of pre-deposit.

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