Advance authorisation compliance bars Customs demand where export obligation is fulfilled and bond redemption is completed.

Once export obligation under an advance authorisation scheme is fulfilled and the bond is redeemed by the licensing authority, Customs cannot sustain duty demand, confiscation or penalty merely on an asserted breach of authorisation conditions. Here, the imported goods were lost in transit, the loss was intimated, the quantity was replaced locally, and the export obligation was completed without rebate or drawback. The HC found no violation of Notification No. 93/2004-Cus and no legal infirmity in the Tribunal's appreciation of evidence, so the duty demand, redemption fine and penalty were held unsustainable and the appeal was dismissed.

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Issues: Whether the Customs authorities could demand duty, confiscate goods, and impose penalty after the export obligation under the advance authorization scheme had been fulfilled and the bond executed with the licensing authority had been redeemed.

Analysis: The imported goods were lost in transit, and the loss was intimated to the department. The respondent replaced the lost quantity by local purchase and completed the export obligation without claiming rebate or drawback. The licensing authority discharged the advance authorization and redeemed the bond. In these circumstances, the customs proceedings could not be sustained on the footing that the conditions of the authorization were breached. The Court also found no violation of Notification No. 93/2004-Cus dated 10.09.2004 and no illegality or perversity in the Tribunal's appreciation of evidence.

Conclusion: The demand of duty, confiscation, redemption fine, and penalty were unsustainable, and the appeal was dismissed.

Ratio Decidendi: Once the export obligation under an advance authorization is fulfilled and the bond is redeemed by the licensing authority, the Customs authorities cannot proceed on the basis of alleged non-fulfilment of the authorization conditions in the absence of a proved violation of the governing exemption notification.

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