End-use exemption conditions do not trigger retrospective duty after notification withdrawal if concessional clearance was valid initially.

Goods cleared under a concessional exemption subject to Chapter X end-use conditions were not liable to retrospective differential duty merely because the notification was later withdrawn. The operative assessment was correct at the time of removal, and the later withdrawal did not create a fresh basis to reassess stock already received under the concessional procedure at the higher rate. The end-use requirement was treated as a post-clearance condition, and the exemption could still be retained if that condition was ultimately satisfied. The Board circular was read consistently with this approach, so the demand for differential duty was unsustainable.

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Issues: Whether duty could be demanded on Viscose Staple Fibre lying in stock after withdrawal of the concessional notification when the goods had been cleared earlier under Chapter X procedure at the concessional rate subject to end-use.

Analysis: The goods were cleared at the concessional rate when the notification was in force, and there was no error in the assessment at the time of removal. The later withdrawal of the exemption did not create a legal basis to reassess goods already received under Chapter X procedure at the higher non-concessional rate. The end-use requirement was only a post-clearance condition, and the benefit of exemption could not be denied merely because the goods were used after withdrawal of the notification. The Board circular also clarified that pending cases of this nature were to be decided on the footing that the end-use condition could be satisfied later.

Conclusion: The demand for differential duty was unsustainable and the assessee was entitled to relief.

Ratio Decidendi: Where goods are cleared under a concessional exemption subject to Chapter X end-use conditions, withdrawal of the exemption does not retrospectively subject the stock to higher duty, and the exemption remains available if the end-use condition is ultimately satisfied.

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