2026 (1) TMI 407 - AT - Customs

Customs exemption for re-imported repaired parts without identification marks upheld, based on invoices, airway bills, repairer certificate.

The dominant issue was whether exemption under Not. No. 94/96-Cus for re-imported goods after repairs could be denied for lack of physical identification ... Entitlement to exemption to goods re-imported after repairs in excess of the duty leviable on the cost of repairs including any material used in repairs - benefit of notification no. 94/96-Cus - Whether there is sufficient evidence that the imported goods were the same as those which were exported or not - Undisputedly, there were no marks and numbers on the goods and it is for this reason, that the Joint Commissioner and the Commissioner (Appeals) denied the benefit of the exemption notification. HELD THAT:- In the absence of any marks and numbers, going by the above details in the documents from the Commercial Invoices under which the appellant had exported defective parts to the invoices and Airway bills under which they have been re-imported including the Certificate issued by the Starlinger, we are convinced that the link between the exported goods and the imported goods has been established through documentary evidence. Accordingly, the appellant is entitled to the benefit of the exemption notification no. 94/96-Cus dated 16.12.1996. The re-determination of the value of the goods, confiscation of the goods, redemption fine and penalty cannot, therefore, be sustained. The impugned order dated 23.10.2019 passed by the Commissioner (Appeals) is set aside and the appeal is allowed with consequential relief to the appellant. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether the re-imported goods qualified for the exemption under Notification No. 94/96-Cus (Sl. No. 2) on the requirement that 'the goods are the same which were exported', despite absence of 'marks and numbers' on the goods. (ii) Whether, upon establishing eligibility to the said exemption, the re-determination of value and the consequential confiscation, redemption fine, and penalty could be sustained. 2. ISSUE-WISE DETAILED ANALYSIS Issue (i): Satisfaction that the re-imported goods were the same as the exported goods for purposes of Notification No. 94/96-Cus (Sl. No. 2) Legal framework: The Court considered Section 20 of the Customs Act, 1962 (re-imported goods to be treated as imported goods), and the exemption under Notification No. 94/96-Cus (Sl. No. 2), which limits duty to the duty leviable on the fair cost of repairs (including materials, insurance, and freight both ways). The notification's proviso requires the proper officer to be satisfied that (a) the goods are re-imported within the prescribed period, and (b) 'the goods are the same which were exported' (and, for Sl. No. 2, no change in ownership). Interpretation and reasoning: The Court identified the sole dispute as whether sufficient evidence existed to establish identity of the re-imported goods with the exported goods. It found that the notification does not specifically mandate 'marks and numbers' as the only method of identification. While the lower authorities denied the exemption because the goods lacked marks and numbers, the Court held that identity can be established through documentary linkage. It relied on the consistent chain of documents connecting export for repair and re-import after repair: the re-import invoice referenced an order confirmation; the airway bill also referred to the same confirmation; the export commercial invoice described sending defective parts of the relevant machine for repair on returnable basis; and a certificate from the foreign repairer certified that the specified parts dispatched under the re-import invoice were re-export after repair and had been received earlier under the export invoices. On this basis, the Court was satisfied that the exported and re-imported goods were the same. Conclusion: Documentary evidence established the required link between export and re-import; therefore, the appellant was entitled to the benefit of Notification No. 94/96-Cus dated 16.12.1996. Issue (ii): Sustainability of re-determined value, confiscation, redemption fine, and penalty after holding the exemption applicable Interpretation and reasoning: The re-determination of value and the punitive measures were founded on denial of the exemption (premised on lack of marks and numbers and alleged failure to establish identity). Once the Court concluded that identity was established and the exemption applied, the basis for re-determining the value on a non-exemption footing and for treating the declaration as warranting confiscation and penal consequences did not survive. Conclusion: The re-determination of value, confiscation, redemption fine, and penalty were held unsustainable and were set aside along with the impugned order; the appeal was allowed with consequential relief.