Concessional import duty depends on strict compliance; defective components cleared as scrap without statutory basis remained dutiable.

Concessional import duty under the applicable import rules is available only where the prescribed conditions for intended use are complied with. Imported components that were found defective after assembly and testing were cleared as scrap without re-export or other statutory compliance, and no rule permitted such clearance in those circumstances. On that basis, the duty demand was sustained, and the challenge to the demand failed.

---

---

Issues: Whether imported components cleared at concessional rate of duty could be subjected to duty demand when the components, after assembly and testing, were found defective and were cleared as scrap without export.

Analysis: The concessional import scheme was examined with reference to the conditions governing actual use of the imported components in manufacture. The components were found not to have been put to the intended use in the manner required under the 1996 Rules, and the case did not fall within any provision permitting clearance of the defective goods as scrap in the absence of re-export or other statutory compliance. On that footing, the demand was held to be sustainable.

Conclusion: The demand of duty was upheld and the appellant's challenge failed.

Ratio Decidendi: Benefit of concessional import duty is available only upon compliance with the prescribed conditions of the concessional import rules, and defective goods cannot be cleared as scrap without a statutory basis for such clearance.

---