Court upholds USD export obligation calculation under EPCG Scheme, rejects exchange rate argument & validates communication.

The court dismissed the appeal regarding the calculation of export obligation under the EPCG Scheme. It upheld that the obligation must be fulfilled in USD, regardless of exchange rate fluctuations, as stated on the license. The court also rejected the argument to use the exchange rate at the license issuance date for computation. Additionally, the court upheld the validity of the respondent's communication requiring resubmission of export statements and ruled that policy amendments were not applicable retrospectively to the case.

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Issues Involved:
1. Calculation of export obligation under the EPCG Scheme.
2. Exchange rate to be used for computing export obligation.
3. Validity of the respondent's communication requiring resubmission of export statements.
4. Applicability of policy amendments and circulars.

Detailed Analysis:

1. Calculation of Export Obligation Under the EPCG Scheme:
The appellant challenged the order of the learned Single Judge, which rejected their plea for using the exchange rate prevailing on the date of the license issuance under the EPCG Scheme for computing export obligation. The appellant was granted permission to import machinery at a concessional duty rate, with an obligation to export goods worth three times the CIF value of the imported capital goods. The license issued on 18th March 1991 required the appellant to fulfill an export obligation of US$ 11,600,459, calculated as three times the CIF value.

2. Exchange Rate to be Used for Computing Export Obligation:
The appellant argued that the export obligation should be calculated based on the exchange rate prevailing on the date of license issuance. They contended that the fluctuating exchange rates should not affect their obligation, as it would be unfair and onerous. However, the respondent maintained that the export obligation was to be fulfilled in USD, as noted on the license, and any devaluation of the rupee should not benefit the appellant. The learned Single Judge agreed with the respondent, stating that the export obligation was fixed in USD and must be discharged in freely convertible currency, irrespective of exchange rate fluctuations.

3. Validity of the Respondent's Communication Requiring Resubmission of Export Statements:
The appellant sought to quash the respondent's communication dated 23rd October 2001, which required resubmission of the export statements. The respondent argued that the appellant was attempting to mislead by converting export values based on the exchange rate at the time of export rather than the rate at the time of license issuance. The learned Single Judge upheld the respondent's position, noting that the export obligation was clearly stated in USD on the license and the appellant's method of calculation was incorrect.

4. Applicability of Policy Amendments and Circulars:
The appellant cited an amendment to the policy dated 28th May 1998, which stated that export proceeds realized in any currency should be converted into USD at the exchange rate prevailing on the date of license issuance. However, the court found that this circular was not applicable retrospectively to the appellant's case, as their last shipment was made on 14th September 1995. The court emphasized that the policy aimed to earn foreign exchange in fully convertible currency and the appellant could not benefit from the subsequent devaluation of the rupee.

Conclusion:
The court dismissed the appeal, finding no merit in the appellant's arguments. The detailed reasoning of the learned Single Judge was upheld, emphasizing that the export obligation was fixed in USD and must be fulfilled in freely convertible currency, irrespective of exchange rate fluctuations. The court also noted that policy amendments and circulars cited by the appellant were not applicable retrospectively.

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