EPCG export obligation regularisation defeats customs demand once discharge certificate and duty-paid closure are produced.

Where an EPCG importer produced the export obligation discharge certificate and a duty-paid regularisation letter, the customs demand for alleged non-fulfilment of export obligation could not be sustained. The text states that the appellant had already paid the duty and interest attributable to the shortfall, obtained DGFT regularisation, and secured closure of the case as redeemed and closed. On that basis, the factual foundation for invoking Section 28 of the Customs Act, 1962 was treated as no longer surviving, and rejection of relief merely because the documents were not produced earlier was considered unjustified.

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Issues: Whether the demand of customs duty and interest confirmed for alleged failure to fulfil EPCG export obligation could survive after the appellant produced the export obligation discharge certificate and duty paid regularization letter.

Analysis: The appellant had imported capital goods under the EPCG scheme without payment of duty and the demand was raised under Section 28 of the Customs Act, 1962 for alleged non-fulfilment of export obligation. The record showed that the appellant subsequently paid the duty and interest attributable to the shortfall, obtained regularization from the DGFT, and produced the export obligation discharge certificate before the appellate authority. Once the competent foreign trade authority had regularized the case, treated the default as bona fide, and stated that the case stood redeemed and closed, the factual foundation for the customs demand no longer remained. The appellate authority's refusal to grant relief on the ground that the documents were not earlier produced was held to be unjustified.

Conclusion: The demand could not be sustained and the assessee succeeded.

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