Premature customs demand before export obligation period expires is treated as arbitrary, with substance preferred over technical default.

Customs duty proceedings were challenged on the ground that the show cause notice was issued before expiry of the export obligation period under the licence. The analysis treats that premature initiation as arbitrary and technically faulty, particularly where the licence allowed eight years for compliance and the original order was passed without a reply from the exporter. It emphasises that the real inquiry is whether the exporter ultimately satisfied the licence conditions, and that substantial justice should prevail over a mere technical default. On that reasoning, the impugned customs demand and connected appellate orders were set aside.

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Issues: Whether the impugned customs duty demand and the connected appellate orders were liable to be set aside on the ground that the proceedings were initiated before expiry of the export obligation period and the matter warranted a substantive rather than technical approach.

Analysis: The licence allowed eight years for fulfilment of export obligations, yet the show cause notice was issued before expiry of that period and the original order followed without a reply from the petitioner. Although the petitioner had pursued the appellate remedy belatedly and the appellate rejection had attained finality, the Court treated the initiation of the proceedings as arbitrary and faulty. The Court held that in such matters the real question is whether the exporter satisfied the licence conditions, and that a mere technical default should not defeat relief where substantial justice requires otherwise.

Conclusion: The impugned orders were set aside and the writ petition was allowed in favour of the petitioner.

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