Export obligation fully satisfied, so duty demand, confiscation, redemption fine, interest and penalty could not survive.

Once the export obligation on the imported capital goods was accepted as fully satisfied, the legal basis for duty demand, confiscation, redemption fine, interest and further penalty fell away. The appellate authority had already recorded 100% fulfilment of the obligation and imposed only a penalty for delayed production of the certificate, which had been paid. The Commissioner proceeded on an incorrect assumption that the obligation remained unfulfilled. The demand, confiscation, redemption fine, interest and penalty were therefore held unsustainable and set aside in favour of the assessee.

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Issues: Whether duty demand, confiscation, redemption fine, interest and penalty could survive after the export obligation in respect of the imported capital goods had been accepted as fulfilled.

Analysis: The appellate authority had already accepted fulfilment of the export obligation to the extent of 100% and had imposed only a penalty for late production of the required certificate, which had been paid. The Commissioner did not take note of those orders and proceeded on the footing that the export obligation remained unfulfilled. Once the export obligation stood satisfied, the basis for demanding duty or for confiscating the capital goods and imposing redemption fine, interest and further penalty disappeared.

Conclusion: The demand, confiscation, redemption fine, interest and penalty were unsustainable and were set aside in favour of the assessee.

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