Duty-free import shortage under DEEC scheme sustained where export obligation was not proven on inspection date.

Duty-free zinc alloy ingots imported under the DEEC scheme were found short on inspection, and the admitted shortage supported duty liability because the export obligation had not been shown as fulfilled on the date of visit. A later DGFT certificate did not displace the contemporaneous finding, as it was issued after the inspection and therefore did not negate the shortage detected at that time. The plea that weighment was only estimated was rejected. Duty and penalty were sustained, while the penalty was reduced from Rs. 30,000 to Rs. 15,000.

---

---

Issues: Whether duty and penalty were leviable on shortage of duty-free imported zinc alloy ingots when the appellants had not established fulfillment of the export obligation on the date of inspection.

Analysis: The imported zinc alloy was brought without payment of duty for use in manufacture of export goods under the DEEC scheme. The shortage was detected on the date of visit, and the weighment was conducted in the presence of the Manager (Import & Export), who admitted the shortage. The later DGFT certificate showing fulfillment of export obligation was dated after the inspection and did not displace the finding that the obligation had not been completed on the date of visit. The contention that the weighment was only on estimate basis was therefore not accepted.

Conclusion: Duty liability and imposition of penalty were sustained, but the penalty was reduced from Rs. 30,000 to Rs. 15,000.

---