The authority of the DGFT in determining fulfillment of export obligations prevails over Customs demands, which cannot contradict DGFT’s issued certificates.

This Appeal is filed by the importer against the Order- in-Original No.010-19-20 dated 10.01.2020 passed by the Commissioner of Customs, Tuticorin.

2. Brief and relevant facts as could be gathered from impugned Order-in-Original are that the importer, who is engaged in imports of copper concentrates for manufacturing of copper products viz. copper anodes, copper cathodes etc., was alleged to have contravened the provisions of Customs Notification No.96/2009-Cus and Notification No.99/2009-Cus both dated 11.09.2009. It is the case of the Revenue that the importer had failed to comply with the conditions laid down in the Notifications (supra) by not discharging their Export Obligation (EO) in full, in terms of value and quantity.

3. The core issue revolves around Advance Authorizations bearing Nos. 3510025541 dated 02.01.2009, 3510028373 dated 30.11.2009 and 3510030535 dated 10.06.2010 obtained by the Appellant, whereunder, the Appellant was allowed to import copper concentrate duty free, subject to the condition that the Appellant would export copper anode/anode slime to the extent the export obligation was specified under the said three Advance Authorizations. The fulfillment of export obligation in the said 3 Advance Authorizations was subject to both, quantity and value.

4. The Advance Authorization Scheme is one of the various schemes introduced by the Government, under the Foreign Trade Policy, ('FT' for short) read with the Hand Book of Procedures, ('HBP' for short), for incentivizing exports. Under the Scheme, a manufacturer-exporter is allowed to import without payment of any duties of customs, raw materials as per a fixed Input-Output Norm, subject to fulfillment of export obligation, as prescribed by the Licensing Authority/Regional Authority (DGFT), both in terms of value and quantity, within the stipulated time period. In consonance to the theme and objective of the Scheme, the Government (Ministry of Finance) has, from time to time, issued Notifications to give effect to the Scheme. The Notifications relevant to the present case are Notification No.96/2009-Cus and No.99/2009-Cus, both dated 11.09.2009.

5. It is undisputed that while the export obligation in terms of quantity was completely fulfilled by the Appellant in respect of two Advance Authorizations dated 30.11.2009 and 10.06.2010, there was however, a shortfall in fulfillment of the export obligation in terms of value. With respect to the Advance Authorization dated 02.01.2009, there was some shortfall in fulfillment of the export obligation both in terms of value and quantity. It is claimed that the shortfall in fulfilling the export obligation with respect to the quantity was regularized by the Appellant in terms of para 4.28 of the FTP (2009-14) / para 4.49 of the FTP (2015-2020) on payment of appropriate Customs duty along with interest under Challans dated 30.06.2017 and 26.07.2017 respectively.

6. The dispute therefore, is with respect to some shortfall in fulfillment of the export obligation in terms of value with regard to the three Authorizations dated 02.01.2009, 30.11.2009 and 10.06.2010.

7. Para 4.28 of the FTP (2009-14) / para 4.49 of the FTP (2015-2020), which deals with regularization of bonafide default in fulfilment of export obligations, both in terms of value and quantity. The above provision provides that in case of there being a bonafide default in fulfillment of export obligation in terms of value, the license holder is required to pay an amount equal to 1% of such shortfall in value (FOB) to regularize the same.

8. It appears that Appellant made a written request to the DGFT for regularization of their default in fulfilment of the EO in terms of value qua the 3 Advance Author