Disputed duty demand on exports overturned due to payment confirmation and timely receipt, appeals allowed.

The demand of duty forgone on exported goods due to alleged non-receipt of remittance in freely convertible currency from Asian Development Bank was at issue. The court found that the necessary certificates confirmed receipt of payment in the prescribed currency, and both the Project Authority and the Principal Contractor acknowledged receipt of funds. As the goods were exported and received by the project authority without any allegation of non-export within the stipulated period, the demand notices were deemed unsustainable. Therefore, the impugned orders were set aside, and the appeals were allowed.

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Issues:
Demand of duty forgone on exported goods due to alleged non-receipt of remittance in freely convertible currency from Asian Development Bank.

Analysis:
The appellants, manufacturers of various products falling under Chapter sub-heading no. 3824 of Central Excise Tariff Act, 1985, had exported goods to a specific project in Bhutan under specified conditions. The department confirmed demand of duty forgone on the ground that remittance for the exported goods was not shown to have been received from Asian Development Bank in freely convertible currency in Indian rupee. Two demand notices were issued under Section 11A of Central Excise Act, 1944, covering exports made under a single bond. The Ld. Commissioner had upheld the order partially, citing non-furnishing of payment particulars towards export proceeds in due time.

The appellant challenged the impugned orders, arguing that all necessary certificates were issued by banks confirming receipt of payments from Asian Development Bank for exports made to the project. They contended that imposition of penalty was unwarranted as all assessments were finalized in compliance with the specified conditions. The department, however, maintained that there was an infringement of the notification conditions.

Upon review, it was found that the project was executed as per a bilateral agreement between India and Bhutan, with the impugned notification allowing exports to the specified project under bond with security. Bank certificates confirmed receipt of payment in the prescribed currency, and both the Project Authority and the Principal Contractor acknowledged receipt of funds from Asian Development Bank. Given that other bonds were canceled and securities released for past exports to the same project, the demand for Central Excise duties in the present case was deemed unjustified. As the goods were exported and received by the project authority, without any allegation of non-export within the stipulated period, the demand notices were deemed unsustainable. Consequently, the impugned orders were set aside, and the appeals were allowed.

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