Reimport exemption limits Special Additional Duty where unpaid Central Excise duty on exported goods has already been paid.

Reimported goods cleared under Notification No. 94/96-Cus. were covered by an exemption from basic customs duty, additional duty and special duty to the extent the duty exceeded the amount specified in the relevant table entry. Where the goods had been reimported under bond and the Central Excise duty not paid on export had already been discharged, the duty payable was confined to that unpaid excise amount. On that footing, no further Special Additional Duty could be demanded, and reliance on Notification No. 56/98-Cus. to deny the exemption was untenable.

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Issues: Whether reimported goods cleared under Notification No. 94/96-Cus. dated 16-12-1996 were liable to Special Additional Duty despite the assessee having paid the amount of Central Excise duty not paid on the exported goods.

Analysis: Notification No. 94/96-Cus. granted exemption to reimported goods from basic customs duty, additional duty under Section 3 of the Customs Tariff Act, 1975, and special duty under Section 16(1) of the Finance (No. 2) Act, 1996, to the extent the duty exceeded the amount indicated in the corresponding entry of the table. For goods reimported under bond without payment of Central Excise duty, the duty payable was confined to the amount of Central Excise duty not paid. Since the revenue did not dispute that the assessee had paid the central excise duty due on the goods, no further amount could be demanded. The reliance placed on Notification No. 56/98-Cus. to deny the exemption was therefore untenable.

Conclusion: The impugned demand of Special Additional Duty was unsustainable and the assessee was entitled to the exemption under Notification No. 94/96-Cus.

Ratio Decidendi: Where a reimport exemption notification limits duty to the amount of Central Excise duty not previously paid, no further Special Additional Duty can be demanded if that duty has already been paid.

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