Concessional import inputs re-exported unused cannot sustain duty demand where governing rules treat them as not imported for that purpose.

Imported inputs cleared under a concessional regime for manufacture of excisable goods were substantially used in production, and the balance was re-exported under the governing rules. The prior decision in the assessee's own case treated such re-exported unused inputs as if they had not been imported for the relevant purpose, so no duty demand could be sustained on that basis. Applying that principle, the duty demand was held unsustainable.

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Issues: Whether duty demand was sustainable when imported inputs cleared at concessional duty were substantially used in manufacture and the balance was re-exported instead of being used in the final product.

Analysis: The imported inputs were obtained under the concessional import regime for manufacture of excisable goods. The record showed that a substantial portion was used in manufacture and the remaining inputs were re-exported in accordance with the governing rules. The earlier decision in the assessee's own case had already held that once such unused inputs are re-exported, the situation is to be treated as if those goods had not been imported for the relevant purpose, and no duty demand can be sustained on that basis.

Conclusion: The duty demand was unsustainable and the assessee succeeded.

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