Customs duty recovery barred where export obligation was substantially fulfilled and the demand rested on a mistaken factual premise.

Customs duty recovery was found unsustainable where the exporter had substantially fulfilled the export obligation and the Export Obligation Discharge Certificate was issued without dispute as to its genuineness. The demand and recovery notice rested on a mistaken factual premise that the obligation had not been met, so retention and collection of duty lacked authority. Article 265 of the Constitution barred levy or collection without authority of law, and the recovery notice was quashed. Costs were imposed on the petitioner for delay in approaching the Court.

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Issues: Whether customs duty already recovered and the consequential recovery notice could be sustained when the petitioner had substantially fulfilled the export obligation and the foundation of the demand was an erroneous assumption of non-fulfilment.

Analysis: The record showed that the Export Obligation Discharge Certificate was issued and that the petitioner had achieved substantial fulfilment of export obligation. The Department did not dispute the genuineness of that certificate. On that basis, the premise underlying the order-in-original and the later recovery notice was a mistake of fact, namely that the export obligation had not been met. In such circumstances, retention and collection of duty lacked authority, and Article 265 of the Constitution of India barred levy or collection without authority of law.

Conclusion: The recovery of duty and the consequential notice were unsustainable and were quashed, with costs imposed on the petitioner for delay in approaching the Court.

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