Re-imported goods retained customs exemption where original manufacture was excise duty-free under Notification No. 62/95-CE.

Re-imported goods manufactured by an Ordnance Factory were treated as eligible for customs duty exemption because the original manufacture was already excise duty-free under Notification No. 62/95-CE dated 16.3.1995. The analysis states that goods sent abroad for modification and then brought back into India retained the benefit of the exemption attached at the manufacturing stage, so the customs duty demand proceeded on an incorrect basis. On that reasoning, the demand for customs duty was unsustainable and the re-imported goods were entitled to exemption.

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Issues: Whether re-imported goods manufactured by an Ordnance Factory were entitled to exemption from customs duty in view of the excise duty-free status of the original manufacture under Notification No. 62/95-CE dated 16.3.1995.

Analysis: The goods manufactured by the Ordnance Factory were stated to be excise duty-free under the notification. On that basis, the re-imported goods, after being sent abroad for modification and brought back into India, were held to merit exemption on re-importation. The duty demand was founded on a misconception that ignored the effect of the exemption already applicable to the goods at the manufacturing stage.

Conclusion: The re-imported goods were entitled to exemption and the customs duty demand was unsustainable.

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