Bank guarantee invocation upheld where export obligation was not proved by required shipping bills and discharge certificate.

Bank guarantees furnished under an advance licence may be invoked where the exporter cannot show discharge of the export obligation through the prescribed DEEC shipping bills and a competent authority's discharge certificate. The text states that conversion of the free shipping bills into DEEC shipping bills had been rejected, and the appeal against that rejection also failed. In that situation, the records did not establish compliance with the redemption conditions, so customs authorities were entitled to retain the encashed amount until the required certificate was produced. The refusal to order refund was therefore justified on the stated facts.

---

---

Issues: Whether the invocation of the bank guarantees and refusal to direct refund of the encashed amount were justified in the absence of conversion of free shipping bills into DEEC shipping bills and production of a discharge certificate showing fulfillment of export obligation.

Analysis: The petitioner had obtained an advance licence subject to fulfillment of export obligation and was required to support redemption by the prescribed shipping bills and discharge certificate from the competent authority. The requested conversion of the free shipping bills into DEEC shipping bills had been ed, and the appeal against that rejection also did not succeed. In that situation, the records did not establish that the export obligation stood discharged in the manner required for release of the bank guarantees. The handbook provisions governing redemption and discharge of BG/LUT supported the view that the customs authorities could retain the amount until the requisite certificate was produced.

Conclusion: The invocation of the bank guarantees was held to be justified, and no direction for refund was granted in the absence of a discharge certificate. The decision was against the petitioner and in favour of the revenue.

---