Intended use under customs exemption prevents duty recovery where imported goods became unusable after amalgamation.

Imported goods cleared duty free under an exemption for use in manufacture were later rendered unusable after amalgamation and were destroyed. As the record showed no mala fide intent, no diversion from the intended purpose, and no unjust enrichment to the revenue, the expression "for use" was applied as "intended for use". On that basis, recovery of the customs duty foregone was held unsustainable and the assessee succeeded.

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Issues: Whether customs duty foregone under the exemption notification was recoverable when the imported goods, though brought in for manufacture, became unusable because of amalgamation and were ultimately destroyed.

Analysis: The imported goods were brought duty free for use in manufacture under the exemption notification, but they became redundant after amalgamation of the appellant company. The record did not show any mala fide intention or any evidence that the goods were imported for a purpose other than intended use. The Court also noted that the goods had become unusable for reasons beyond the appellant's control and that the revenue had not established any enrichment at its expense. In these circumstances, the principle that the expression "for use" means "intended for use" was applied.

Conclusion: The demand for recovery of customs duty was not sustainable and the appeal succeeded in favour of the assessee.

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