Fulfilment of export obligation preserves duty exemption benefit despite alleged diversion of imported material.

Fulfilment of export obligation within the permitted or validly extended period preserved entitlement to the benefit of Notification No. 204/92-Cus., and the alleged sale or diversion of duty-free imported material did not by itself defeat that benefit. The shipping bills recorded the export particulars, advance licence details and raw materials used, and Customs had accepted them. Mere delay between import and export, or differences between invoice value and job charges, was insufficient to establish breach where the export pattern had been accepted and the goods manufactured from the imported material were exported. The exports were required to be logged, and denial of the notification benefit was unsustainable.

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Issues: Whether exports made under the two advance licences were entitled to be logged for discharge of export obligation, and whether alleged sale or diversion of duty-free imported material defeated the benefit of Notification No. 204/92-Cus. when export obligation had been fulfilled within the permitted or extended period.

Analysis: The shipping bills contained the description of the exported goods, the advance licence particulars and the raw materials used, and they had been accepted by Customs. Mere lapse of time between import and export, or the difference between invoice value and job charges, was insufficient to establish breach of the notification, especially when the same export pattern had been accepted in other instances by Customs itself. The fact that the imported material may have been delivered to supporting manufacturers did not by itself show contravention, because the goods manufactured from such material were exported and the period for fulfilling export obligation had been extended on payment of the prescribed compensation fee. The governing principle applied was that once export obligation is fulfilled within the time allowed, including any valid extension, the benefit under the notification cannot be denied merely because the imported material was used or disposed of in the sequence alleged by revenue.

Conclusion: The exports were required to be logged, and the denial of benefit under Notification No. 204/92-Cus. was not sustainable; the assessee succeeded on the merits.

Final Conclusion: The impugned order was set aside and the appeal was allowed, with the assessee held entitled to logging of exports under the two advance licences.

Ratio Decidendi: Fulfilment of export obligation within the prescribed or validly extended period preserves the benefit of a duty exemption notification, and alleged prior or subsequent handling of the imported material does not by itself establish violation absent proof that the obligation was not duly discharged.

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