Substantial compliance with export incentive conditions upheld where Modvat credit was reversed on time despite minor interest delay.

Substantial compliance with an export incentive notification was found where Modvat credit had been reversed before the cut-off date, and a minor delay in paying interest in some instances did not defeat entitlement to the Amnesty Scheme. The Tribunal followed the earlier view that belated interest payment alone is not fatal, and also noted that in several export instances no credit had been taken at all. On those facts, the substantive requirement of the scheme was treated as satisfied, and the demand was not sustainable.

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Issues: Whether reversal of Modvat credit before the cut-off date, with payment of interest partly after the cut-off date, satisfied the conditions of the export incentive notification and entitled the importer to the benefit of the Amnesty Scheme.

Analysis: The appellant had reversed the credit in the relevant cases well before 31.01.1997, and the only lapse was that interest in some instances was paid on 01.02.1997. The earlier decision holding that a minor delay in payment of interest does not by itself defeat the benefit of the scheme was followed, and the Tribunal also noted that in several export instances no credit had been taken at all. On that basis, the Court treated the facts as showing compliance with the substantive requirement of the scheme.

Conclusion: The conditions of the notification were held to be substantially complied with, and the demand could not be sustained.

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