Exemption on temporary export of machinery and nil duty on re-import upheld where ownership stayed with the importer.

Export of road-construction machinery to Bangladesh after completion of the intended contracts did not, on these facts, amount to a prohibited disposal or breach of Condition 75 of Notification No. 20/99-Cus because ownership remained with the importer and there was no sale or transfer of title; the exemption could therefore not be denied on that basis. The same machinery, when re-imported into India, satisfied the conditions of Notification No. 94/96-Cus because it was the identical goods earlier exported, so nil duty treatment applied and customs duty was not leviable. The customs demand and refusal of refund were accordingly unsustainable.

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Issues: (i) Whether export of road-construction machinery to Bangladesh before completion of five years amounted to violation of Condition 75 of Notification No. 20/99-Cus dated 28.02.1999 so as to deny the exemption. (ii) Whether the re-imported machinery was entitled to nil duty benefit under Notification No. 94/96-Cus dated 16.12.1996.

Issue (i): Whether export of road-construction machinery to Bangladesh before completion of five years amounted to violation of Condition 75 of Notification No. 20/99-Cus dated 28.02.1999 so as to deny the exemption.

Analysis: The imported machinery had been used for the road construction contracts for which it was brought into India. After completion of those contracts, the goods were taken to Bangladesh for use in another project, but there was no sale or transfer of title. The machinery continued to remain in the ownership of the importer, and the subsequent re-importation supported that position. On these facts, sending the goods abroad did not amount to a prohibited disposal attracting breach of the condition.

Conclusion: The condition of Notification No. 20/99-Cus was not violated, and the exemption could not be denied on that ground.

Issue (ii): Whether the re-imported machinery was entitled to nil duty benefit under Notification No. 94/96-Cus dated 16.12.1996.

Analysis: The notification granted nil duty to goods re-imported into India if they were the same goods as exported. There was no dispute that the machinery re-imported in January 2005 was the same machinery earlier exported. The statutory condition for re-import benefit was therefore satisfied.

Conclusion: The re-imported machinery was entitled to the benefit of Notification No. 94/96-Cus, and customs duty was not leviable.

Final Conclusion: The customs demand and rejection of refund were unsustainable, and the assessee was entitled to relief.

Ratio Decidendi: Where goods imported under an exemption notification are subsequently taken abroad after completion of the intended work without sale or transfer of title, such movement does not constitute prohibited disposal, and the same goods, on re-importation, are eligible for the notified re-import benefit if the statutory conditions are met.

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