Exemption notification for imported capital goods: duty cannot be demanded once installation and use conditions are satisfied.

Imported capital goods covered by Notification No. 126/94 were not liable to duty where they were installed and used within the unit for export production, because clause 3(b)(i) made duty payable only if that condition was not met or the goods were not re-exported within the prescribed period. Mere failure to fulfil the overall export commitment did not, on the plain language of the notification, sustain the duty demand. The separate question concerning consumables under clause 3(b)(iv) was not decided on merits and was left open for further hearing.

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Issues: (i) Whether capital goods imported under Notification No. 126/94 dated 03-06-1994 were liable to duty despite failure to fulfil the export commitment, where the goods had been installed and used within the unit.

Analysis: The relevant condition in clause 3(b)(i) required duty to be paid only if the capital goods were not proved to have been installed or otherwise used within the unit or re-exported within the prescribed period. On the plain language of the notification, once the capital goods were installed and used for export production, the duty demand could not be sustained merely because the export commitment was not fully met. The separate question relating to consumables under clause 3(b)(iv) was not finally examined on merits and was only kept open by issuance of notice.

Conclusion: The duty demand in respect of the capital goods was not sustainable and the assessee succeeded on that issue.

Final Conclusion: The order recognises that installation and use of the imported capital goods satisfied the relevant notification condition, while the distinct issue under clause 3(b)(iv) remained pending for further hearing.

Ratio Decidendi: Where an exemption notification makes duty payable only if imported capital goods are not installed or otherwise used within the prescribed period, duty cannot be demanded once that condition is satisfied merely because the exporter later fails to meet the overall export commitment.

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