Licence-wise appropriation under an amnesty scheme was allowed where no mandatory payment sequence was prescribed.

Under the amnesty scheme linked to Notification No. 203/92-Cus, compliance had to be tested licence-wise, but no statutory or judicial direction required the payments to be appropriated in chronological order. On that basis, pre-cut-off reversals and interest payments could be allocated against the advance licences in the manner chosen by the assessee, so long as the scheme's conditions were substantially met. The Revenue's insistence on a fixed chronological clubbing method was rejected, and the customs duty demand had to be confined only to the licences that actually remained in default.

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Issues: Whether, under the amnesty scheme linked to Notification No. 203/92-Cus, the appellant was entitled to have the pre-31.01.1997 reversals and interest payments appropriated licence-wise in the manner chosen by it, so as to confine the customs duty demand only to the licences that remained in default.

Analysis: The scheme required reversal of MODVAT credit and payment of interest by the stipulated date for the importer-exporter to avoid customs duty and penal consequences. The judgment proceeds on the basis that the High Court had already directed licence-wise examination of compliance, but had not prescribed any compulsory sequence for clubbing or allocating the payments across the licences. The record also showed that the demand arose from a complex factual matrix involving multiple licences, multiple imports, and payments made before the cut-off date. In that setting, there was no legal basis for the Revenue's insistence that the licences must be arranged strictly in chronological order and that the appellant's prior payments must be appropriated in that manner. The appellant's method did not violate the scheme or the High Court's directions, and the non-cash remittance of interest was not treated as a valid ground to deny the benefit once the amount had ultimately been paid and the authorities had accepted compliance in substantial measure.

Conclusion: The appellant was entitled to appropriate the pre-31.01.1997 payments against the advance licences in the manner chosen by it, and the demand of duty was required to be restricted accordingly; the Revenue's chronological appropriation method was rejected.

Ratio Decidendi: Where an amnesty scheme requires compliance to be tested licence-wise but does not prescribe the order of appropriation, the assessee may allocate qualifying pre-cut-off payments licence-wise in the absence of a contrary statutory or judicial mandate.

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