Duty free authorisation eligibility depends on licence conditions and intended end use, not merely tariff classification.

For import under a duty free authorisation, eligibility must be tested against the licence description and the policy conditions governing the intended end use of the goods. Imported cotton fabrics that were yarn-dyed with check and self-design, and therefore had negligible scope for further printing, were found not to answer the authorised purpose under Notification No. 40/2006-Cus and Paragraph 4.55.3 of the Foreign Trade Policy. The exemption benefit was accordingly denied, the appellate order was set aside, and the original authority's refusal of duty free treatment was restored.

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Issues: Whether the imported cotton fabrics satisfied the duty free import authorisation conditions under Notification No. 40/2006-Cus and Paragraph 4.55.3 of the Foreign Trade Policy.

Analysis: The description of the goods, as examined by the original authority, showed fabrics made of yarn of different colours with check and self-design, indicating negligible scope for further printing. Eligibility under the policy and notification depended on compliance with the licence description and authorisation conditions, not merely on classification notes. On that basis, the imported goods were found not to answer the purpose for which the authorisation had been issued.

Conclusion: The issue was decided against the assessee and in favour of Revenue.

Final Conclusion: The impugned appellate order was set aside and the original authority's denial of the exemption benefit was restored.

Ratio Decidendi: For import under a duty free authorisation, eligibility must be tested against the licence and policy conditions governing the intended end use of the goods, and goods that are not realistically capable of serving that authorised purpose do not qualify for the benefit.

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