Retrospective extension of export obligation time made duty demand, confiscation, redemption fine and penalty unsustainable.

Where the Development Commissioner retrospectively extended the time to fulfil the export obligation, the basis for immediate recovery of customs duty and central excise duty for alleged short-fulfilment within the original period ceased to survive. The retrospective extension meant the adjudication confirming duty demand was premature and could not stand on a non-fulfilment theory tied only to the earlier deadline. As the duty demand was unsustainable, the consequential confiscation, redemption fine and penalty also fell. The impugned order was set aside, granting the appellant complete relief from the fiscal and penal liabilities.

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Issues: Whether the demand of customs duty and central excise duty, confiscation, redemption fine and penalty were sustainable when the Development Commissioner granted retrospective extension of time to fulfil export obligation.

Analysis: The unit had initially been granted permission to manufacture and export software and was later found short of the prescribed export obligation within the original five-year period. However, before the adjudication attained finality, the Development Commissioner extended the permission retrospectively for a further five years from 05.05.2008. In that situation, the order confirming duty demand proceeded on a premature basis, since the appellant had been given additional time to comply with the export obligation. Once the extension operated with retrospective effect, the foundation for treating the imports and procurement as liable to immediate recovery of duty ceased to survive.

Conclusion: The demand of customs duty and central excise duty was held unsustainable. Consequently, confiscation, redemption fine and penalty were also held unsustainable.

Final Conclusion: The impugned order was set aside and the appellant obtained complete relief against the confirmed fiscal and penal liabilities.

Ratio Decidendi: Where a competent authority retrospectively extends the time to fulfil export obligation, an adjudication confirming duty demand and consequential confiscation or penalty on the footing of non-fulfilment within the original period becomes unsustainable.

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