Regularised export procedure defeats duty demand based only on a condoned procedural violation.

Exports made through third-party premises were initially objected to as contrary to the Exim Policy, but the Ministry of Commerce and Industry later regularised the procedure and condoned the violation. Once the competent authority ratified the exports, the show-cause proceedings had no surviving foundation, and the customs duty demand based solely on the alleged procedural infraction could not be sustained. The appellate forum found no material to disturb that conclusion, and the order dropping the proceedings was upheld.

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Issues: Whether the demand of duty could be sustained when the exports made through third-party premises were subsequently regularised by the Ministry of Commerce and Industry and the procedural violation was condoned.

Analysis: The record showed that the exports had initially been objected to as contrary to Para 9.36 of the Exim Policy 1997-2002, but the Ministry of Commerce later regularised the exports. On that basis, the adjudicating authority held that the show-cause proceedings had no surviving basis, and the appellate forum found no contrary material to dislodge that finding. Once the exports stood ratified, the demand founded on the alleged irregular export procedure and the consequential customs duty demand could not be maintained.

Conclusion: The demand was not sustainable and the order dropping further proceedings was upheld in favour of the assessee.

Final Conclusion: The appeal failed, and the order dropping the proceedings remained undisturbed.

Ratio Decidendi: When the competent authority subsequently regularises and condones the export procedure, a duty demand founded solely on that procedural infraction cannot survive.

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