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Issues: (i) Whether the imported paver finisher was entitled to exemption under Notification No. 21/2002-Cus. when the importer had undertaken to use it exclusively for road construction and not to dispose of it for five years; (ii) Whether the demand of duty under Section 28 of the Customs Act, 1962 was time-barred.
Issue (i): Whether the imported paver finisher was entitled to exemption under Notification No. 21/2002-Cus. when the importer had undertaken to use it exclusively for road construction and not to dispose of it for five years.
Analysis: The exemption under the notification was available only upon compliance with the prescribed conditions, including an undertaking at the time of import that the goods would be used exclusively for construction of roads and not sold or otherwise disposed of for five years. The evidence showed that the paver finisher was not used for road construction but was deployed for construction of a depot and related works at another site. The violation was treated as breach of the undertaking and of the conditions governing the exemption. The prior grant of exemption at assessment did not prevent denial once the breach was established.
Conclusion: The exemption was rightly denied and the duty demand was sustainable in favour of Revenue.
Issue (ii): Whether the demand of duty under Section 28 of the Customs Act, 1962 was time-barred.
Analysis: The notice invoked Section 28 on the footing that the importer had suppressed the true post-import use of the goods and had breached the undertaking furnished at import. Since the violation came to light during investigation and the notice was founded on suppression relating to the intended use and actual use of the goods, the extended period was held to be available.
Conclusion: The demand was not barred by limitation and Section 28 was validly invoked.
Final Conclusion: The appeals challenging denial of exemption and demand of duty failed, while the Revenue's appeal on penalties also failed, the impugned order being upheld in full.
Ratio Decidendi: Where exemption is conditioned on exclusive use and non-disposal for a specified period, proof of actual diversion to a different use constitutes breach of the undertaking and justifies denial of exemption and recovery of duty under Section 28 when suppression is established.
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