Actual-use condition for concessional import duty failed where damaged components were never used in manufacture.

Imported parts cleared under an exemption notification remained ineligible for concessional duty where the notification made actual use in the specified manufacture a mandatory condition. Because the components were admittedly damaged after clearance and were not in fact used in manufacture of the specified motor vehicles, the condition for exemption was not satisfied and the differential duty became payable. Authorities dealing with intended use or manufacturing wastage were distinguished on their facts. The duty demand was upheld, while the interest demand was not sustained.

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Issues: Whether imported parts and components, though cleared under an exemption notification for use in manufacture of specified motor vehicles, remained eligible for the concessional duty benefit when they were found damaged before actual use and were not in fact used for the specified purpose.

Analysis: The exemption notification made the benefit conditional upon the imported components being used for the specified manufacturing purpose and required the importer to pay the differential duty on failure to comply with that condition. The components in question were admittedly not actually used, as they were found damaged after clearance from the warehouse. The condition in the notification was held to be clear and mandatory, and the cited authorities on intended use or manufacturing wastage were distinguished as dealing with different factual and legal situations.

Conclusion: The components that were not actually used for the specified purpose were not eligible for the concessional exemption benefit, and the duty demand was upheld. The interest demand was not sustained.

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