EPCG export obligation shortfall made good with interest: redemption fine and penalty were not warranted on these facts.

Under the EPCG scheme, non-fulfilment of block-wise export obligation did not require redemption fine or penalty where the importer later paid the customs duty shortfall with interest after it was pointed out. The exemption conditions required the obligation to be met in specified blocks and, on default, duty and interest to be discharged within the prescribed time. As the duty liability was made good with interest and the record showed no further infirmity in the adjudicating authority's approach, the demand for redemption fine and penalty was not sustained.

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Issues: Whether redemption fine and penalty were warranted when the importer failed to fulfil the block-wise export obligation under the EPCG scheme but paid the customs duty and interest on being pointed out.

Analysis: The conditions of the EPCG authorization and the customs exemption notification required the export obligation to be met in specified blocks and, on shortfall, duty with interest to be paid within the prescribed time. The importer did not meet the first block requirement, but the duty liability together with interest was discharged after investigation commenced. In these circumstances, the adjudicating authority had accepted the payment of duty and interest and declined to impose redemption fine or penalty. The record did not show any infirmity in that approach.

Conclusion: Redemption fine and penalty were not exigible on the facts of the case.

Final Conclusion: The rejection of the revenue's challenge was sustained, and the order declining redemption fine and penalty remained undisturbed.

Ratio Decidendi: Where the duty shortfall arising from non-fulfilment of export obligation is made good with interest and the statutory notification is otherwise complied with, redemption fine and penalty need not be imposed absent further infirmity.

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