Conditional exemption for re-imported goods requires strict re-export compliance; default triggers duty liability and bars substitution of another notification.

Time-bound re-export conditions under Notification No. 158/95-Cus. are substantive and must be strictly complied with; if re-imported goods are not re-exported within the prescribed period, the duty foregone at re-import becomes payable. A subsequent claim of revenue neutrality or possible drawback does not extinguish that liability, because a separate post-export remedy cannot override breach of the exemption conditions. Notification No. 94/96-Cus. cannot be used as an alternative route where the importer has already availed the special facility under Notification No. 158/95-Cus. and then defaulted. The commentary concludes that failure to satisfy the conditional exemption results in duty liability that cannot be avoided by switching notifications.

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Issues: (i) Whether differential duty is recoverable where goods re-imported under Notification No. 158/95-Cus. are re-exported beyond the prescribed period. (ii) Whether such demands can be defeated on the basis of revenue neutrality and entitlement to drawback. (iii) Whether the importer can switch to Notification No. 94/96-Cus. and claim its benefit instead of Notification No. 158/95-Cus.

Issue (i): Whether differential duty is recoverable where goods re-imported under Notification No. 158/95-Cus. are re-exported beyond the prescribed period.

Analysis: Notification No. 158/95-Cus. grants full exemption on re-import for repair or reconditioning, but only if the goods are re-exported within the stipulated period, including any permitted extension. The time limits for re-import and re-export are substantive conditions meant to prevent misuse of the exemption. Failure to comply with those conditions obliges the importer to pay the duty foregone at re-import.

Conclusion: Yes. Differential duty is payable on breach of the re-export condition, and the demand is sustainable.

Issue (ii): Whether such demands can be defeated on the basis of revenue neutrality and entitlement to drawback.

Analysis: The mere possibility of claiming drawback after subsequent re-export does not erase the duty liability created by non-compliance with the exemption conditions. Revenue neutrality cannot override a substantive statutory condition attached to a duty exemption. The availability of a separate post-export remedy does not nullify the duty demand raised for violation of the notification.

Conclusion: No. Revenue neutrality does not extinguish the duty liability.

Issue (iii): Whether the importer can switch to Notification No. 94/96-Cus. and claim its benefit instead of Notification No. 158/95-Cus.

Analysis: Notification No. 94/96-Cus. operates in a different field and does not require subsequent re-export after re-import. It is designed for specified classes of re-imported goods subject to its own conditions, including closure or delogging requirements for DEEC goods and prescribed time limits for DEEC, EPCG, and DEPB goods. A consignee who has availed the special facility under Notification No. 158/95-Cus. cannot bypass its conditions by invoking another notification after default, especially where the other notification is not applicable on its own terms.

Conclusion: No. The benefit of Notification No. 94/96-Cus. is not available as an alternative route.

Final Conclusion: The appeals fail because the appellants did not satisfy the substantive conditions of the re-import exemption and could not substitute a different notification to avoid the resulting duty liability.

Ratio Decidendi: Conditions governing time-bound re-export under a conditional exemption notification are substantive and must be strictly fulfilled; upon default, duty foregone becomes payable and another exemption notification cannot be invoked to circumvent that liability.

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