Excise duty on export goods damaged before export was held unsustainable when goods returned to the export unit.

Excise duty was not payable on export goods cleared under bond by a 100% export oriented unit when the goods were damaged in an accident before export and brought back into the unit. The goods had not entered the domestic tariff area, and the unit was held entitled to the benefit of Notification No. 24/2003 dated 31.03.2003. The Tribunal applied the principle that remission is permissible where goods cleared without payment of duty for export are destroyed in an unavoidable accident, and followed an earlier identical ruling. The duty demand was therefore unsustainable and the impugned order was set aside.

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Issues: Whether excise duty was payable on export goods cleared under bond by a 100% export oriented unit when the goods were damaged in an accident before export and were brought back into the unit.

Analysis: The goods had been cleared for export under bond, but were damaged in an accident before export. The goods were not cleared into domestic tariff area. The unit was entitled to the benefit of Notification No. 24/2003 dated 31.03.2003. The Tribunal also relied on the principle that remission is permissible when goods cleared without payment of duty for export are destroyed in an unavoidable accident, and on the view taken in an identical earlier case that duty could not be demanded in such circumstances.

Conclusion: The duty demand was unsustainable and the impugned order was set aside.

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