2026-VIL-989-CESTAT-DEL-CU
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CUSTOMS CESTAT Cases

Customs – Eligibility to benefit of exemption under Notification No. 24/2005-Cus - Non-fulfillment of Conditions – Appellant imported printed circuit board assemblies under Customs Tariff Item 8517 79 10 claiming exemption under Notification No. 24/2005-Cus, Entry 13S - Denial the exemption alleging non-compliance with the prescribed procedure under the Customs (Imports of Goods at Concessional Rate of Duty) Rules, 2017, which requires the importer to furnish an undertaking to the Deputy Commissioner or Assistant Commissioner of Customs that the goods shall not be used in manufacturing specified products and to follow the requisite documentation and bond procedures – HELD - Appellant contends that although the procedural conditions were not met due to a publisher's error in their reference material, the substantive purpose of the condition was achieved as they were only a trader who sold the goods without using them for manufacturing the excluded items - The exemption Notification No. 24/2005-Cus is a bit unusual as the exemption is available not on the condition that they will be used in a particular fashion but on the condition that they will not be used in a particular fashion viz., in the manufacture of the goods mentioned in clauses (b) to (i) of the entry - While the appellant failed to follow the prescribed procedure and did not furnish the mandatory undertaking, the fundamental purpose underlying the condition—ensuring that the goods were not used to manufacture the excluded products—was actually satisfied in the particular facts of the case as the appellant was merely a trader and had only sold the imported goods without any manufacturing activity - The IGCR Rules scheme is designed to monitor actual use of exempted goods, and when evidence conclusively demonstrates that the goods were not put to prohibited use regardless of procedural non-compliance, the substantive object of the exemption condition stands fulfilled - The demand of duty denying the benefit of the Notification No. 24/2005-Cus cannot be sustained and set aside. Consequently, the demand of interest and the penalties imposed on the appellant also cannot be sustained - The impugned order is set aside and the appeal is allowed
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