Reimport exemption for project goods prevails where export was meant for later return, and manufacturer's bond cannot cover customs liability.

Goods exported for an approved overseas project with a pre-existing plan for reimport were held to fall within the customs exemption regime for reimported project goods, so customs duty on reimport was not justified. The Court also held that an excise bond executed by the manufacturer secured only the manufacturer's own excise liability and could not be treated as a guarantee for the merchant-exporter's customs liability. On those facts, premature discharge of the bond before reimportation was mechanical and unjustified, and it could not be used to deny exemption or support the duty demand.

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Issues: Whether the customs authorities could levy customs duty on reimport of the cranes and whether the discharge of the excise bond executed by the manufacturer was wrongful.

Analysis: The goods were exported for execution of an approved overseas project and were intended to be brought back to India after completion of the work. The documents described the movement as export-cum-reimport, the Reserve Bank of India had granted permission, and the customs certification contemplated release of the bond only on reimportation or realisation of duty. The excise bond was executed by the manufacturer to secure its own excise liability and could not be treated as a guarantee for the merchant-exporter's customs liability. On the facts, the discharge of the bond before reimportation was held to be mechanical and unjustified. The Court further held that the reimport attracted the exemption regime under the customs notification governing goods sent abroad for approved projects, and the petitioners were entitled to clearance without the customs duty demanded as a condition for reimport.

Conclusion: The levy of customs duty on reimport was not justified and the discharge of the excise bond was wrongful; the petitioners succeeded.

Ratio Decidendi: Where goods are exported for an approved project with a pre-existing arrangement for reimport, and the excise bond relates only to the manufacturer's excise liability, customs authorities cannot treat premature discharge of that bond as a basis to deny the statutory reimport exemption or impose customs duty on the merchant-exporter.

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