DGFT clarification cannot override EPCG export conditions where the licence requires export of both specified products.

DGFT clarifications cannot override EPCG policy or licence conditions where they conflict with the export obligation undertaken by the importer. The licence required export of cocoa and chocolate products within the stipulated period, and the imported machinery was found to comprise two distinct plants; chocolate made from one plant was sold only in the domestic market, with no chocolate exports shown. A clarification that effectively substituted an obligation to export either cocoa products or chocolate for the agreed requirement to export both was beyond DGFT's power and inconsistent with the policy and licence terms. The clarification was therefore not binding to that extent, and full discharge of the export obligation was not established.

---

---

Issues: Whether the clarification issued by the DGFT permitting export of either cocoa products or chocolate could override the export obligation and licence conditions requiring export of cocoa and chocolate under the EPCG scheme.

Analysis: The licence and the policy contemplated import of capital goods at concessional duty against an export obligation to export cocoa and chocolate products within the stipulated period. The imported machinery was found to comprise two distinct and separately functioning plants, and the evidence showed that chocolate produced from the chocolate-making plant was sold only in the domestic market, while no chocolate was exported. The clarification issued on behalf of the DGFT could be binding only if it remained within the framework of the policy and the licence. A clarification that effectively altered the export obligation from export of both specified products to export of either one of them was beyond the power of the DGFT and inconsistent with the policy and the licence terms.

Conclusion: The clarification was not binding to the extent it conflicted with the policy and licence conditions, and the assessee could not be treated as having fully discharged the export obligation.

---