Customs exemption and SEZ clearance: re-export condition in a DGH certificate did not defeat the exemption claim.

Exemption under the customs notification was not defeated by failure to re-export goods within the time stated in the DGH certificate, because the notification itself did not prescribe any such time limit and the certificate condition arose from the Foreign Trade Policy. Clearance of the goods to an SEZ unit was treated as export under section 2(m) of the SEZ Act, 2005, so the exemption could not be denied on the ground that the goods were not re-exported in the manner stated in the certificate. Section 69(1) of the Customs Act, 1962 was held inapplicable because it concerns warehoused goods meant for export.

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Issues: Whether the demand of customs duty, interest and penalty could be sustained on the ground that the importer breached the exemption conditions by not re-exporting the goods within the time stated in the DGH certificate, and whether clearance of the goods to an SEZ unit satisfied the requirement.

Analysis: The exemption notification required the sub-contractor to produce a DGH certificate confirming that the goods were required for petroleum operations and imported under the relevant licence or mining lease. It did not itself prescribe any time limit for re-export. The time-bound re-export condition was introduced in the DGH certificate pursuant to the Foreign Trade Policy. A prior decision on the same notification had held that clearance of the goods to an SEZ unit amounts to export under section 2(m) of the SEZ Act, 2005, and that the importer cannot be denied the exemption merely because the goods were not re-exported in the manner stated in the certificate. The reliance on section 69(1) of the Customs Act, 1962 was found inapposite because that provision concerns warehoused goods for export.

Conclusion: The re-export condition in the DGH certificate did not defeat the exemption, and clearance to the SEZ unit satisfied the export requirement.

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