Legal principle

An undertaking given to customs authorities for duty-free imports under an advance licence creates a contractual liability to pay duty and interest on failure to discharge the export obligation, enforceable as directed by the High Court, quite apart from any demand under Section 28AB of the Customs Act, 1962.

Court decision

The Tribunal disposed of the appeal against the appellant, holding that M/s Rivaa Exports is liable to pay the interest as directed by the Hon'ble High Court of Gujarat in its judgment dated 15.06.2006, without deciding the legal submissions on Sections 28/28A/28AB.

Facts

M/s Rivaa Exports procured advance licences and imported grey fabrics without payment of Customs duty under Notification No.31/1997-Cus, giving undertakings to discharge the export obligation within the stipulated period. The appellant discharged the export obligation for 8 licences but failed to do so for 5 licences even after revalidation/extension. A Show Cause Notice was issued demanding duty besides recovery of interest under the Customs Act read with Notification No.31/1997-Cus, and both the lower authorities confirmed the demand of interest. The appellant appealed to the CESTAT, Ahmedabad against the Order-in-Appeal No.81/2006 dated 21.9.06.

Key provisions

• Section 28AB, Customs Act, 1962 — [Omitted] ****
• Section 28, Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 28A, Customs Act, 1962 —  Power not to recover duties not levied or short-levied as a result of general practice