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Issues: (i) whether differential customs duty was payable in full notwithstanding partial fulfilment of export obligation under the advance licence scheme; (ii) whether interest and penalty could be sustained in the facts of the case.
Issue (i): whether differential customs duty was payable in full notwithstanding partial fulfilment of export obligation under the advance licence scheme.
Analysis: The advance licence notification required export obligation to be fulfilled, but the Tribunal had earlier directed that proof of partial exports be accepted and that duty be restricted to the unfulfilled portion on a proportionate basis. The DEEC book entries, countersigned by Customs officers, were treated as contemporaneous evidence of imports and exports and could not be ignored merely because an EODC had not been issued. The adjudicating authority was therefore required to give effect to the earlier remand directions and compute duty only for the unfulfilled export obligation.
Conclusion: Differential customs duty was not recoverable on the entire import; only the duty relatable to the unfulfilled export obligation was payable, and the assessee succeeded on this issue.
Issue (ii): whether interest and penalty could be sustained in the facts of the case.
Analysis: The Tribunal treated itself as bound by the Supreme Court decision in the assessee's own case, under which interest and penalties had been disallowed. In view of that binding determination, no separate demand of interest or penalty could survive.
Conclusion: Interest and penalty were not sustainable and were set aside in favour of the assessee.
Final Conclusion: The impugned order was set aside, duty was confined to the unfulfilled portion of export obligation, and the matter was remitted only for checking the assessee's duty calculations; the demands of interest and penalty did not survive.
Ratio Decidendi: Where an exemption or duty-neutralisation scheme is linked to export obligation, contemporaneous Customs-verified export entries and an earlier binding remand direction require duty to be limited proportionately to the unfulfilled obligation, and interest or penalty cannot be sustained when already disallowed by the superior court in the same matter.
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