Premature duty demand against an export-oriented unit cannot be confirmed before export default and debonding are finally determined.

For a 100% export-oriented unit, customs authorities could issue a show cause notice on alleged breach of export conditions, but confirmation of duty, penalty and confiscation was premature until the Development Commissioner reached a definite conclusion on non-fulfilment of export obligations and the debonding process was completed. Where the de-bonding request remained pending and no definitive finding of export obligation default had been made, duty demand and consequential penal action were not legally sustainable. The article therefore states that such confirmation should await the statutory and administrative determination before enforcement measures are finalised.

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Issues: Whether duty demand, penalty and confiscation could be confirmed against a 100% export-oriented unit before the Development Commissioner had reached a definite conclusion on non-fulfilment of export obligations and before the debonding process was concluded.

Analysis: The circular governing closure or failure to export by 100% EOUs provided that the customs authorities may issue show cause notice when export conditions are breached, but confirmation of duty should follow only after a definite conclusion by the Development Commissioner. The unit's de-bonding request was still pending and no action or definite finding had been taken by the Development Commissioner on export obligation default. In these circumstances, confirmation of duty, penalty and confiscation was not legally sustainable and was premature.

Conclusion: The demand of duty, the penalty and the confiscation were set aside as premature and the appeal succeeded.

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