Partial fulfilment of export obligation under EPCG Scheme required duty recomputation under the concession clause, not full denial of benefit.

Under the EPCG Scheme, partial fulfilment of export obligation did not trigger full duty demand where the conditions for denial of the notification benefit were not met. The Tribunal held that paragraph 5 of Notification No. 110/95-Cus. applied only when the minimum prescribed export obligation remained unmet for three consecutive years, which was not the position on the facts. Because the obligation had been substantially discharged, paragraph 4 governed recomputation of duty liability, allowing credit for exports already made and refund of any excess recovered.

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Issues: Whether, on partial fulfillment of export obligation under the EPCG Scheme, the duty liability was to be computed under paragraph 4 of Notification No. 110/95-Cus. dated 5-6-1995 or whether paragraph 5 applied so as to justify denial of the notification benefit and demand of full duty.

Analysis: The imported capital goods were cleared under the EPCG Scheme against a concessional duty notification subject to export obligation. The appellants had not completed the entire obligation, but the record showed substantial fulfillment over the prescribed period. The Tribunal held that paragraph 5, which contemplates full duty demand with interest where there is failure to discharge the minimum prescribed export obligation for three consecutive years, was not attracted on these facts. Since there was only partial non-fulfillment and the obligation was otherwise substantially discharged, paragraph 4 governed the computation of duty liability and allowed adjustment for the exports already made.

Conclusion: Paragraph 4 was held applicable, paragraph 5 was held inapplicable, and the assessee was entitled to recomputation of duty and refund of any excess amount recovered.

Ratio Decidendi: Where export obligation under an EPCG notification is only partly fulfilled, and the conditions triggering full duty demand are not satisfied, duty liability must be determined under the provision dealing with partial fulfillment rather than the provision authorising denial of the notification benefit in full.

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