Customs exemption cannot be denied merely because the wrong notification was first claimed when scheme conditions are otherwise satisfied.

An export-oriented unit that re-imported defective goods for repair and later re-exported them was entitled to the substantive customs exemption available under the applicable duty-free scheme, because the requisite bond formalities were completed and the goods were ultimately re-exported. The Tribunal held that benefit could not be denied merely because the unit had initially claimed a different exemption notification at the time of re-import, as the correct exemption was otherwise satisfied on the admitted facts. A demand raised on the basis of the initial notification choice and alleged delay in re-export was therefore unsustainable, and the denial of exemption was set aside.

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Issues: Whether the appellant, being an export-oriented unit that re-imported defective goods for repair and later re-exported them, could be denied customs exemption only because it had initially claimed a different exemption notification, and whether the demand raised for failure to re-export within the stipulated period was sustainable.

Analysis: The appellant was an export-oriented unit governed by a general duty-free import scheme and had executed the requisite bond formalities. The re-imported goods were ultimately re-exported, and the only objection was that the appellant had proceeded under one notification at the time of re-import rather than another, more general, exemption notification applicable to export-oriented units. The Tribunal held that, on the admitted facts, the transaction also fell within the wider exemption available to the appellant and that the benefit could not be denied merely because a different notification had been invoked initially. The principle that a claimant is not barred from asserting the correct exemption at a later stage was applied.

Conclusion: The customs duty demand was held unsustainable and the appeal was allowed with consequential relief.

Final Conclusion: The appellant was found entitled to the exemption, and the denial of benefit based only on the initial choice of notification was set aside.

Ratio Decidendi: An assessee cannot be denied a substantive exemption otherwise available under the applicable scheme merely because it initially claimed another notification, where the conditions of the correct exemption are satisfied.

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