Redemption certificate and substantial export compliance can limit duty recovery to the remaining shortfall only.

Duty and interest demand under an exemption notification could not be sustained in full where the assessee produced a redemption certificate from the competent foreign trade authority and showed substantial compliance with the export obligation. Once the redemption letter was furnished, liability based on alleged non-compliance ceased to survive to that extent. Recovery was therefore confined only to the quantified residual shortfall in fulfillment of the export obligation, and the balance demand was set aside.

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Issues: Whether the demand of duty and interest could be sustained despite the subsequent redemption certificate and substantial compliance with the export obligation under the exemption notification.

Analysis: The appellant produced the redemption letter issued by the competent foreign trade authority, and the record showed substantial compliance with the export obligation. Once the redemption certificate was furnished, the liability arising from the alleged non-compliance ceased to sustain to that extent. The demand could therefore survive only to the extent of the remaining quantified shortfall in fulfillment of the export obligation.

Conclusion: The demand of duty and interest was set aside except for the limited amount attributable to the shortfall in export obligation.

Final Conclusion: Recovery was confined only to the residual shortfall, and the appeal succeeded in substantial part.

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