Duty-free job-work imports may be re-exported without duty where export orders are cancelled and goods remain supplier-owned.

Duty-free goods imported for bona fide job work under Notification No. 32/97 were held not liable to duty where the export order was cancelled by the foreign supplier, the goods were not diverted, and ownership remained with the supplier. The Tribunal treated the failure to complete the job as bona fide and found no legal basis to treat the imported goods as dutiable. Re-export was also allowed without insisting on duty, because requiring payment would defeat the job-work facility and serve no regulatory purpose when the goods were to be returned to the supplier.

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Issues: (i) Whether duty demand was sustainable where goods were imported duty-free for job work but the export order was cancelled and the goods were sought to be re-exported. (ii) Whether re-export could be permitted without insisting on payment of duty.

Issue (i): Whether duty demand was sustainable where goods were imported duty-free for job work but the export order was cancelled and the goods were sought to be re-exported.

Analysis: The imported goods were brought in for job work under Notification No. 32/97, and the importer's inability to complete the job arose from cancellation of the export order by the foreign supplier. The goods were not shown to be imported in violation of law or diverted to any other use. The failure to satisfy the notification conditions was treated as bona fide, and the goods remained the property of the foreign supplier.

Conclusion: The duty demand was not sustainable and was set aside in favour of the assessee.

Issue (ii): Whether re-export could be permitted without insisting on payment of duty.

Analysis: The Tribunal applied the principle that, in a bona fide situation where the importer does not acquire ownership and the goods are to be sent back to the supplier, insisting on duty would frustrate the purpose of the job-work facility and burden trade without serving any regulatory object. The offer to re-export on agreed terms was also noted, but the Tribunal held that duty need not be insisted upon.

Conclusion: Re-export was permitted without payment of duty and in favour of the assessee.

Final Conclusion: The demand of duty was quashed and the importers were allowed to re-export the goods without duty liability.

Ratio Decidendi: Where duty-free goods imported for bona fide job work remain the supplier's property and the export obligation fails due to cancellation of the underlying order, re-export may be allowed without imposing duty if the goods are neither prohibited nor diverted.

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