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Issues: (i) Whether the foreign exchange receipts claimed through NRI/NRE subscriptions and service activities could be treated as fulfilment of export obligation under the EPCG licence; (ii) whether duty was recoverable only in proportion to the unfulfilled export obligation or the entire duty foregone; (iii) whether interest was chargeable on the duty demand; (iv) whether the Settlement Commission's order warranted interference in writ jurisdiction.
Issue (i): Whether the foreign exchange receipts claimed through NRI/NRE subscriptions and service activities could be treated as fulfilment of export obligation under the EPCG licence.
Analysis: The Settlement Commission examined the materials and the correspondence from the licensing authority and concluded that the subsequent earnings relied on by the applicant were outside the relevant export obligation period. It accepted the licensing authority's communication that only 14% of the export obligation had been achieved and declined to reopen the rejection of extension of time by the licensing authority.
Conclusion: The finding that only 14% of the export obligation was fulfilled was not interfered with and stood accepted.
Issue (ii): Whether duty was recoverable only in proportion to the unfulfilled export obligation or the entire duty foregone.
Analysis: The Settlement Commission proceeded on the footing that the exemption notification required recovery only to the extent of non-fulfilment of the export obligation. It held that the importer had undertaken to pay the duty leviable on the capital goods to the extent the conditions of the exemption were not complied with, and the revenue's contrary stand was rejected.
Conclusion: Duty was held recoverable only proportionately to the unfulfilled export obligation.
Issue (iii): Whether interest was chargeable on the duty demand.
Analysis: The Settlement Commission found that during the relevant import period there was no authority under the Customs Act or the exemption notification to levy interest on the duty arising from failure to fulfil export obligation. The writ court found no reason to disturb that conclusion.
Conclusion: No interest was chargeable on the subject imports.
Issue (iv): Whether the Settlement Commission's order warranted interference in writ jurisdiction.
Analysis: The Court applied the limited scope of judicial review over settlement commission orders and held that interference is justified only where the order is contrary to the statute and causes prejudice. It also held that a writ court cannot direct a statutory authority to act contrary to the statutory scheme or to revive an extension already refused by the licensing authority.
Conclusion: No ground for interference was made out.
Final Conclusion: Both writ petitions were dismissed, leaving the Settlement Commission's order intact, including the proportionate duty liability and the finding that no interest was leviable.
Ratio Decidendi: In writ review of a Settlement Commission order, interference lies only for contravention of the governing statute causing prejudice, and a court cannot compel a statutory authority to act contrary to the statutory scheme or revisit a refused extension of export obligation.
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