Exemption conditions and burden of proof in imported equipment cases: third-party custody is not sale or disposal without evidence.

Denial of exemption requires proof that the prescribed conditions were breached; mere third-party custody or financing arrangements do not, by themselves, establish non-road use, sale, or permanent disposal. The record showed the piling rigs were cleared for road construction projects and used for piling work connected with road-related construction, while the alleged DMRC use lacked independent support. No documentary evidence proved transfer of title within five years, and possession with another entity did not amount to a sale. The Revenue also failed to show permanent divestment of control or final disposal by the importer, so the exemption conditions were not violated and the duty demand, confiscation, redemption fine, and penalties could not survive.

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Issues: (i) Whether the imported piling rigs were used otherwise than for construction of roads so as to breach the exemption condition; (ii) Whether the rigs were sold within five years from importation; (iii) Whether the rigs were otherwise disposed of so as to violate the exemption notification.

Issue (i): Whether the imported piling rigs were used otherwise than for construction of roads so as to breach the exemption condition.

Analysis: The import record showed that the rigs were cleared against the notification for road construction projects, and the record also contained evidence that they were actually used for piling work in connection with road-related construction. The allegation of use at a DMRC site was not supported by any statement from DMRC officials or other independent material. The evidentiary basis for concluding use for a non-road purpose was therefore not established.

Conclusion: The allegation of use for a purpose other than construction of roads was not proved.

Issue (ii): Whether the rigs were sold within five years from importation.

Analysis: No documentary material was produced to show transfer of title in the imported goods from the importer to any other person. Mere shifting of possession or placement of the goods with another entity for financial accommodation did not, by itself, establish a sale.

Conclusion: Sale of the rigs was not established.

Issue (iii): Whether the rigs were otherwise disposed of so as to violate the exemption notification.

Analysis: The crucial question was whether the goods had been parted with permanently so that the importer lost control over them. The record indicated that the rigs were in the custody of others at the time of seizure, but the Revenue did not prove any permanent divestment or final disposal by the importer. The continued financial linkage and control with the importer negatived the allegation of disposal.

Conclusion: Otherwise disposal of the rigs was not proved.

Final Conclusion: The conditions of the exemption notification were held not to have been violated, and the duty demand, confiscation, redemption fine, and penalties could not survive.

Ratio Decidendi: Denial of exemption requires proof of breach of the prescribed conditions, and mere third-party custody or financing arrangements do not amount to sale or disposal in the absence of evidence of transfer of title or permanent divestment of control.

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