Conditional exemption under customs notification requires container-wise verification before denying benefit, demand, confiscation and penalties.

Conditional exemption under Notification No. 104/94-Cus. is discussed as depending on re-export of durable containers within the prescribed or extended period, with the Department bearing the burden to prove breach before denying the benefit. The text notes that repeated changes in container counts, duplicate entries and incomplete reconciliation meant the record did not show a full container-wise verification of non-re-export. It further states that demand, confiscation and penalties could not be sustained on aggregate compilations alone, and that fresh adjudication was required after proper documentary verification and reconciliation.

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Issues: (i) Whether violation of Notification No. 104/94-Cus. stood established; (ii) Whether the demand, confiscation and penalties were confirmed on the basis of adequate verification and examination of evidence.

Issue (i): Whether violation of Notification No. 104/94-Cus. stood established.

Analysis: The exemption under the notification was conditional upon re-export of durable containers within the stipulated period or such extended period as may be permitted. The burden lay on the Department to establish breach of the notification conditions before denying the exemption. The record showed repeated revisions in the disputed container count, duplicate entries and other discrepancies, while the appellant produced reconciliation material, vessel-wise records and export particulars for a substantial portion of the containers. The available material did not show a complete container-wise verification establishing non-re-export of each disputed container.

Conclusion: Violation of Notification No. 104/94-Cus. was not conclusively proved.

Issue (ii): Whether the demand, confiscation and penalties were confirmed on the basis of adequate verification and examination of evidence.

Analysis: The proceedings were found to rest on incomplete verification of the evidence and on aggregate departmental compilations rather than a full container-wise scrutiny of the import and export records. The remand ordered earlier had required fresh examination of documentary evidence, but the de novo adjudication still did not complete the reconciliation exercise. The appellant's additional statement indicated verifiable export data for most of the containers and other categories requiring further verification, showing that the dispute turned on proper reconciliation rather than established default. In these circumstances, the confirmation of duty and consequential liabilities could not be sustained without fresh examination of the records.

Conclusion: The demand, confiscation and penalties were not confirmed on the basis of adequate verification and examination of evidence.

Final Conclusion: The impugned order was set aside and the matter was remanded for fresh adjudication after container-wise verification of the documentary evidence and reconciliation materials, with all contentions kept open.

Ratio Decidendi: In a conditional exemption case, denial of benefit and consequential demand can be sustained only after proper verification establishing breach of the exemption conditions on a container-wise basis; where the factual foundation remains unverified and incomplete, remand for fresh adjudication is warranted.

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