Extended export obligation period made duty demand premature, so confiscation and penalties under the customs notification failed.

Benefit under Notification No. 13/81-Cus. depended on fulfilment of the export obligation within the stipulated period or any extended period granted by the competent authority. Where the authority had extended the time for commencement of production and completion of exports up to 30-9-2001, duty liability under the notification could arise only on failure at the end of that extended period. A show cause notice issued in December 1998, before expiry of the extended time, was premature. The demand, confiscation and penalties were therefore unsustainable and the assessee succeeded.

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Issues: Whether the demand of duty, confiscation of goods and penalties under Notification No. 13/81-Cus. could be sustained when the competent authority had extended the period for commencement of production and fulfilment of export obligations.

Analysis: The benefit of the notification was subject to fulfilment of the prescribed export obligation within the stipulated period or such extended period as might be allowed by the competent authority. Since the competent authority had extended the time up to 30-9-2001, the obligation to pay duty under the notification could arise only on failure to fulfil the export condition at the end of that extended period. A notice issued in December 1998, before expiry of the extended period, was therefore issued before the liability could crystallise.

Conclusion: The demand, confiscation and penalties were unsustainable and the appeals were allowed in favour of the assessee.

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