Exemption conditions and export obligation cannot trigger duty demand where contaminated goods made export impossible beyond the importer's control.

Imported goods brought in for export obligation under a concessional-duty scheme were later found contaminated and unfit for export. The importer informed the authorities, sought permission to destroy the goods under supervision, and had used them for the intended job work, showing no diversion, sale, or misuse. In these circumstances, failure to complete export arose from impossibility caused by the condition of the goods rather than breach of the notification conditions. Duty demand was therefore not sustainable, and the exemption conditions could not be enforced to levy duty merely because the export obligation remained unfulfilled.

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Issues: Whether customs duty could be demanded for alleged breach of the exemption notification conditions when the imported goods were found contaminated, could not be exported, and were sought to be destroyed under supervision.

Analysis: The imported goods were initially brought in for fulfilment of export obligation under the notification and were taken up for job work in terms of the applicable concessional-duty rules. The record showed that the goods were subsequently found contaminated and unfit for export, and the importer had informed the authorities, sought permission for destruction, and made efforts to comply with the export requirement. In these circumstances, the failure to complete export was attributable to impossibility arising from the condition of the goods rather than any diversion, sale, or misuse of the imported goods.

Conclusion: Duty demand was not sustainable, as the exemption conditions could not be enforced against the importer in the factual situation presented.

Final Conclusion: The appeal succeeded and the duty demand was set aside with consequential relief in accordance with law.

Ratio Decidendi: Where imported goods are used for the intended purpose and export performance becomes impossible due to circumstances beyond the importer's control, the exemption conditions cannot be enforced to demand duty merely because the export obligation remained unfulfilled.

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