Export obligation compliance limits customs recovery and supports concessional duty when later policy changes are prospective

Customs authorities could not recover duty or deny exemption once the Development Commissioner had already recorded that the export obligation was fulfilled, because the governing circular required customs action only after that determination. The assessee's compliance and amended policy position supported that conclusion, so the demand was unsustainable. Concessional duty under Notification No. 2/95 also could not be denied on the basis that advance DTA sales were not adjusted within the period relied on by the department, since the later circulars and policy amendments were prospective and the record showed substantial exports and satisfaction of the obligation. The impugned order was set aside and relief followed.

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Issues: (i) Whether customs authorities could proceed to recover duty and deny exemption when the Development Commissioner had already recorded a definite conclusion that the export obligation was fulfilled; (ii) Whether the appellant remained ineligible for concessional duty under Notification No. 2/95 on the footing that advance DTA sales were not adjusted within the period taken by the department.

Issue (i): Whether customs authorities could proceed to recover duty and deny exemption when the Development Commissioner had already recorded a definite conclusion that the export obligation was fulfilled.

Analysis: The governing Board circular required customs action to follow only after the Development Commissioner had completed proceedings and arrived at a definite conclusion. The Development Commissioner had already concluded that the export obligation stood fulfilled. In that situation, the customs authority could not disregard the finding and independently proceed on the premise that no reference to the Development Commissioner was required. The amended policy position and the export details also supported compliance with the obligation.

Conclusion: The issue was decided in favour of the assessee. The customs authority was not justified in proceeding to recover duty despite the Development Commissioner's conclusion.

Issue (ii): Whether the appellant remained ineligible for concessional duty under Notification No. 2/95 on the footing that advance DTA sales were not adjusted within the period taken by the department.

Analysis: The department's objection rested on the time limit for adjustment of advance DTA sales against the entitlement accruing within the relevant period. However, the later circulars and amended policy provisions relied upon by the appellant were held to operate prospectively, while the record also showed substantial exports and satisfaction of the export obligation. On those facts, the denial of concessional duty under the notification could not be sustained.

Conclusion: The issue was decided in favour of the assessee. The appellant was entitled to the concessional benefit and the duty demand could not stand.

Final Conclusion: The impugned order was set aside and the appeal succeeded with consequential relief.

Ratio Decidendi: Where the competent export authority has already recorded a definite conclusion that export obligation is fulfilled, customs authorities cannot proceed contrary to that determination for denying exemption or recovering duty, particularly where the later policy changes relied upon are only prospective.

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