Sugar export quota duty demand fails where the export agency certified fulfilment and gave no default intimation.

Excise duty on alleged shortfall in sugar export quota could not be sustained where the designated export agency had certified that the export obligation was fulfilled and had not intimated any default to Central Excise authorities. The statutory scheme placed responsibility for allocation, delivery and default intimation on the export agency; Section 7 of the Sugar Export Promotion Act, 1958 contemplated duty only on a shortfall against the fixed quota, and Rule 5 of the Sugar Export Promotion Rules, 1973 required notice of failure to deliver. In the absence of such intimation, duty could not be demanded merely on the revenue's view that no physical export had occurred.

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Issues: Whether excise duty could be demanded for alleged shortfall in fulfilment of export quota for sugar when the designated export agency had issued a certificate stating that the export obligation was fulfilled and no intimation of default had been sent to the Central Excise authorities.

Analysis: The statutory scheme placed the responsibility on the designated export agency to deal with allocation, delivery, and intimation of any failure to deliver the export quota. Section 7 of the Sugar Export Promotion Act, 1958 contemplated duty only where there was a shortfall in delivery against the fixed quota, while Rule 5 of the Sugar Export Promotion Rules, 1973 required the designated authority to notify the Central Excise officers of such failure. On the facts, no such intimation had been received, and the export agency itself had certified fulfilment of the export obligation. In these circumstances, the demand could not be sustained merely on the basis of the revenue's view that no physical export had been made.

Conclusion: The duty demand was unsustainable and the appeal was allowed in favour of the assessee.

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