Customs duty exemption for bona fide trade samples imported free of charge; confiscation and penalty were found unsustainable.

Commercial or trade samples imported free of charge and intended to solicit orders were treated as exempt from customs duty under Notification No. 154/94-Cus., because samples of negligible value used for bona fide trade purposes fell within the exemption contemplated by the notification and the Geneva Convention. On that basis, the import was not treated as a contravention of the Export-Import Policy, and confiscation and personal penalty were held unsustainable and set aside in favour of the assessee.

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Issues: Whether commercial or trade samples imported free of charge as free commercial samples were exempt from customs duty under Notification No. 154/94-Cus. dated 13-7-1994, and whether confiscation and penalty were sustainable for alleged violation of the Export-Import Policy.

Analysis: The imported goods were described in the invoice as commercial or trade samples supplied free of charge and were intended to solicit orders. Samples of negligible value used for bona fide technical or trade purposes fall within the exemption contemplated by the notification issued in line with the Geneva Convention. On that basis, no customs duty was payable and the import could not be treated as a contravention of the Export-Import Policy.

Conclusion: The confiscation and personal penalty were not sustainable and were set aside in favour of the assessee.

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