Retrospective export-obligation extension under customs exemption defeated differential duty, confiscation and penalty where compliance was within time.

Retrospective extension of the export-obligation period under Customs Notification No. 160/92 preserved the exemption where the obligation was fulfilled within the extended time. The public notice and DGFT confirmation extended the period, and the Finance Act, 2001 gave that extension retrospective effect up to 31 March 2002. On those facts, the basis for denying exemption no longer survived, so differential customs duty, confiscation of goods and penalty were unsustainable.

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Issues: Whether the appellants were liable to differential customs duty, confiscation and penalty after the period for fulfilment of export obligation had been extended retrospectively under the exemption notification and the export obligation was fulfilled within the extended period.

Analysis: The exemption under Customs Notification No. 160/92 operated subject to fulfilment of export obligation. The period for such fulfilment was extended by public notice and the extension was confirmed by the DGFT. The later amendment introduced by the Finance Act, 2001 gave retrospective effect to the extended time limit and made it clear that the extension could operate up to 31 March 2002. Since the appellants had fulfilled the export obligation within the extended period, the foundation for denial of exemption did not survive. In that situation, the demand of differential duty, the confiscation of goods and the penalty could not be sustained.

Conclusion: The demand, confiscation and penalty were set aside and the appeal was allowed.

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