Industrial sickness for export obligation relief must be assessed on evidence, not mechanically fixed to BIFR registration.

Eligibility for extension of export obligation under the EPCG scheme turns on when industrial sickness actually arose, not mechanically on the date of BIFR registration. The court noted that the petitioner's balance sheet showed accumulated losses before the cut-off date, so the authority had to examine the financial records and assess whether the Exim Policy could be applied on the facts. Because that inquiry was not properly undertaken, the rejection order could not stand on the reasoning adopted. The matter was remanded for fresh consideration after giving the petitioner an opportunity to produce supporting documents and be heard.

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Issues: Whether the rejection of the request for extension of time to fulfil export obligation under the EPCG scheme was sustainable when the petitioner claimed that its industrial sickness had arisen prior to the cut-off date and the authority had treated the date of BIFR registration as ative.

Analysis: The petitioner's financial condition as reflected in the balance sheet for the relevant year showed accumulated losses before the cut-off date. Sickness of an industrial unit is not a static event fixed only by the date on which BIFR registers a reference. The relevant enquiry is when the sickness in fact arose, especially where the request concerns extension of export obligation under the Exim Policy. The authority was therefore required to examine the petitioner's financial records and determine whether Para 5.5.1 of the Exim Policy could be applied on the facts. That exercise had not been properly undertaken.

Conclusion: The rejection order could not be sustained on the basis adopted and required reconsideration. The matter was remanded to the authority for fresh consideration after giving the petitioner an opportunity to place supporting documents and to be heard.

Ratio Decidendi: For deciding eligibility for extension of export obligation under the Exim Policy, the date of actual industrial sickness must be examined on the evidence and cannot be mechanically fixed as the date of BIFR registration.

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