Customs exemption fails where export obligation and positive NFEE are unproven; duty demand and penalties follow.

An STPI unit could not claim customs duty exemption under Notification No. 52/2003-Cus without proof of export performance and positive Net Foreign Exchange Earning. The Tribunal noted that no reply was filed before the lower authorities and no documentary evidence was produced to show compliance with the exemption conditions. In the absence of such proof, the duty foregone became recoverable, and the imported goods remained liable to confiscation, redemption fine, and penalty. The plea of economic recession did not displace the statutory requirement to satisfy the conditions attached to the exemption.

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Issues: Whether an STPI unit that failed to produce evidence of export performance and positive Net Foreign Exchange Earning could claim exemption from customs duty under the notification, and whether the consequential demand, confiscation, redemption fine, and penalty were sustainable.

Analysis: The exemption under Notification No. 52/2003-Cus was conditional upon compliance with the stipulated export obligation and achievement of positive NFEE. The record showed no reply before the lower authorities and no documentary proof before the Tribunal to establish fulfillment of those conditions. In the absence of evidence of compliance, the duty foregone became recoverable, and the imported goods were liable to the consequential measures imposed by the original authority. The plea of economic recession did not alter the statutory liability arising from failure to satisfy the exemption conditions.

Conclusion: The exemption claim failed and the demand of customs duty with the connected confiscation, redemption fine, and penalty was upheld against the assessee.

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