Chapter X clearance under valid CT 2 certificates bars duty demand based only on missing rewarehousing certificates.

Duty could not be demanded from the consignor merely for non-production of rewarehousing certificates where motor vehicle parts were cleared under valid CT 2 certificates following Chapter X procedure. The exemption framework required compliance with the licence, bond, CT 2 and accounting requirements, and the goods were shown to have been supplied under that regime. Rules 156B and 173N, which related to warehousing and the self-removal system, did not govern these clearances. On that basis, the absence of rewarehousing certificates alone did not fasten duty liability, and the demand was unsustainable against the assessee.

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Issues: Whether duty could be demanded from the consignor for non-production of rewarehousing certificates when motor vehicle parts were cleared under valid CT 2 certificates pursuant to Chapter X procedure.

Analysis: The exemption notification made clearance subject to Chapter X procedure, and the goods were supplied against valid CT 2 certificates issued for the recipient manufacturers. The demand was founded on Rules 156B and 173N, but those provisions related to warehousing and the self-removal regime, whereas the goods in question were cleared under Chapter X. The relevant Chapter X framework required compliance with the licence, bond, CT 2 and accounting procedure, and the facts showed that the goods had been cleared in that manner. In those circumstances, the absence of rewarehousing certificates could not by itself fasten duty liability on the appellants.

Conclusion: The demand of duty was not sustainable against the appellants, and the issue was decided in favour of the assessee.

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