Advance Authorization disputes: Customs demand was premature while DGFT proceedings on export-obligation compliance were still pending.

Where the legality of an Advance Authorization or fulfilment of its export obligation is already under consideration before the DGFT, Customs may investigate and issue notice but should not finally adjudicate the duty demand until the DGFT has taken a conclusive decision on the same issue. The customs demand confirming duty, interest, fine and penalty was therefore premature, set aside, and the matter remanded for decision after the DGFT determines the export-obligation controversy.

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Issues: Whether the customs adjudication confirming duty, interest, fine and penalty on imports under Advance Authorizations was premature when proceedings on the same export-obligation issue were already pending before the DGFT.

Analysis: The dispute turned on the allocation of decision-making authority under the export-import regime. The appeal records that the DGFT had already issued show cause notices on the same alleged misuse of the Advance Authorization scheme and those proceedings were still pending. On that basis, the Tribunal held that Customs may investigate and issue notice where there is doubt about eligibility of the exemption, but a final determination on compliance with the Advance Authorization conditions and fulfilment of export obligation must await the DGFT's decision. As the adjudication in Customs proceeded before the DGFT concluded the parallel proceedings, the impugned demand was treated as premature.

Conclusion: The demand order was premature and was set aside, with the matter remanded to be decided after the DGFT reaches its decision on the same issue.

Final Conclusion: The decision leaves the substantive customs liability open for reconsideration after the competent foreign trade authority determines the export-obligation controversy.

Ratio Decidendi: Where the legality of an Advance Authorization or the fulfilment of its export obligation is already under consideration before the DGFT, Customs may initiate proceedings but should not finally adjudicate the demand until the DGFT has taken a conclusive decision on the same issue.

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