Conditional customs exemption and pre-deposit waiver fail where export obligation is unfulfilled and hardship is not proved.

Conditional customs exemption was available only on fulfilment of the linked export obligation, and non-compliance with those notification conditions supported the duty demand and the insistence on pre-deposit. The plea of financial hardship was not accepted because the balance sheet and trading results did not show a genuine inability to make the deposit. Waiver of the duty pre-deposit was therefore declined, while waiver was granted only for the penalty amount subject to compliance with the deposit direction.

---

---

Issues: Whether waiver of pre-deposit under Section 129E of the Customs Act, 1962 was justified in a case where the importer had not fulfilled the export obligation attached to a conditional customs exemption notification, and whether financial hardship warranted dispensing with the deposit.

Analysis: The imported brass scrap was covered by a conditional exemption under Notification No. 30/97-Cus. The exemption was linked to discharge of export obligation within the prescribed period, and the record showed that the conditions of the notification had not been complied with. The demand for duty therefore arose from failure to satisfy the terms on which the duty-free benefit had been obtained. On the plea of hardship, the balance sheet and trading results did not establish an inability to make the pre-deposit. In these circumstances, the Revenue was found to have a strong case on merits and the statutory requirement of pre-deposit was not waived in full.

Conclusion: Waiver of the duty pre-deposit was declined, and the appellant was directed to deposit the duty amount within the stipulated time, with waiver of pre-deposit only in respect of the penalty amount upon compliance.

Ratio Decidendi: Where customs exemption is conditional upon fulfillment of export obligation, non-compliance with those conditions justifies insistence on pre-deposit, and financial hardship will not by itself warrant waiver when the applicant's financial position does not show genuine inability to comply.

---