Strict compliance with exemption and amnesty conditions: delayed reversal of credit interest does not preserve fiscal immunity.

Fiscal exemption notifications and amnesty schemes require strict compliance with their stated conditions, including any cut-off date for reversal of Modvat credit and payment of interest. The text explains that Notification No. 203/92-Cus. applied only where no input-stage credit was taken, and the Amnesty Scheme granted relief only if credit and interest were reversed and paid by the prescribed deadline. Belated payment of interest, even after reversal of credit, did not satisfy the scheme. On that analysis, duty liability remained enforceable and the withdrawal of proceedings was unsustainable.

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Issues: Whether the importer was entitled to the benefit of Notification No. 203/92-Cus. and immunity under the Amnesty Scheme despite reversal of Modvat credit and payment of interest after the prescribed cut-off date.

Analysis: The exemption under Notification No. 203/92-Cus. required that no input-stage credit be taken for the exported goods. The Amnesty Scheme granted relief only if the credit taken on inputs, together with the interest due thereon, was reversed and paid within the stipulated time, namely by 31-1-1997. The respondents reversed the credit but paid the interest only on 6-2-1997 and again on 9-9-1998, beyond the prescribed deadline. Exemption notifications and special amnesty schemes in fiscal matters must be construed strictly, and there is no scope for relaxation of the time condition unless the scheme so provides.

Conclusion: The respondents did not satisfy the conditions of the Amnesty Scheme and were not entitled to retain the exemption. The demand of duty was sustainable and the dropping of proceedings was unsustainable.

Final Conclusion: The appeal succeeded, the impugned order was set aside, and the matter was sent back for fresh adjudication in accordance with the governing law.

Ratio Decidendi: In fiscal exemption schemes, stipulated time conditions for reversal of credit and payment of interest must be strictly complied with, and belated compliance does not confer immunity from duty liability or related proceedings.

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