2026-VIL-158-CESTAT-CHE-CU
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CUSTOMS CESTAT Cases

Customs - Compliance with export obligation (EO) under Advance Authorizations – Appellant was issued three Advance Authorizations to import copper concentrates duty-free, subject to fulfilling the specified export obligation (EO) in terms of both value and quantity. While the appellant fulfilled the EO in terms of quantity, there was a shortfall in fulfilling the EO in terms of value - DGFT regularized the shortfall by allowing the appellant to pay 1% of the shortfall in value, and issued Export Obligation Discharge Certificates (EODCs) redeeming the Advance Authorizations -The Customs authorities sought to demand duty on the ground that the appellant had violated the conditions of the relevant Customs notifications by not fully discharging the EO - Whether the Customs authorities can raise a demand alleging violation of the conditions of the Customs notifications, when the DGFT had already regularized the shortfall and issued EODCs – HELD - The DGFT is the final authority on interpretation of Foreign Trade Policy (FTP) and it is the DGFT who specifies the export obligation to be fulfilled. Once the DGFT has regularized the shortfall and issued EODCs, the Customs authorities cannot take a different view and deny the benefit of duty exemption. Customs authorities cannot override the decision of the DGFT, which is the licensing authority - The condition in the Customs notifications regarding fulfillment of EO has to be read in the context of the provisions of the Foreign Trade Policy and Handbook of Procedures (HBP), and not in isolation. Once the DGFT has regularized the shortfall in EO and issued EODCs, the Customs authorities cannot go behind this and raise a demand - The issuance of EODCs by the DGFT has the effect of the export obligation having been revised and restated. Thus, the demand raised by Customs authorities does not survive – The impugned order is set aside and the appeal is allowed
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