2026-VIL-913-DEL-CU
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CUSTOMS High Court Cases

Customs - Concessional Import for Petroleum Operations, FTWZ Warehousing - Re-import Exemption - Notification 45/2017-Customs – Petitioner-Sub-contractor engaged in petroleum operations imported specialized equipment under concessional duty regime at nil BCD and 12% IGST under Notification 50/2017-Customs against Essentiality Certificate issued by contractor. Upon completion of contract, proposed to move equipment to FTWZ for temporary warehousing pending identification of fresh contract. Subsequently proposed to clear equipment from FTWZ to DTA against fresh Essentiality Certificate and claim dual exemption under concessional rates under NN-50 and residuary exemption under Serial No. 5 of NN-45 as re-imported goods - Whether equipment warehoused in FTWZ pending fresh contract constitutes re-imported goods eligible for exemption under Serial No. 5 of Notification 45/2017 and whether dual exemption can be claimed under NN-50 and NN-45 for same movement - HELD – The FTWZ movement does not constitute genuine export contemplated by re-import exemption scheme. Concessional import under NN-50 is conditional on fulfillment of conditions including export upon completion of specified contract to specific contractor. Original Essentiality Certificate creates closed transaction requiring export and constitutes condition attached to initial import not capable of being converted into procedural formality through FTWZ arrangement – The NN-50 itself provides express mechanism under Condition 48(c) for transfer of equipment to other eligible petroleum operations without need for export-reimport cycle - Statutory fictions under SEZ Act cannot be extended beyond purpose for which enacted to override independent conditions of NN-50 or manufacture exemption under NN-45. Equipment moves as intervening warehousing arrangement between two domestic contractual deployments not as export followed by genuine re-import - Substantive reality shows equipment remains within India continuously available to appellant for domestic use triggered only by fresh domestic contract and fresh Essentiality Certificate. Permitting such arrangement would allow indefinite tax-neutral cycles through successive domestic contracts defeating legislative intent. Re-import requires not merely identity of goods but requisite continuity between export and return with return bearing character of restoration or reversal of outward movement. Equipment cannot simultaneously bear two inconsistent legal identities namely import for NN-50 purposes and re-import for NN-45 purposes - Subsequent transaction arising from new Essentiality Certificate for different contractual engagement is entirely distinct self-contained transaction not connected to first transaction sufficiently to constitute re-import – The movement of equipment constitutes fresh import not re-import under NN-45. Dual exemption under NN-50 and NN-45 cannot be claimed for same movement – The AAR Orders are upheld and the appeals are dismissed
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