Advance licence fuel imports excluded from DEPB computation where export obligation is otherwise fulfilled.

Fuel imported under an advance licence for captive power generation could not be counted against DEPB computation where the applicable export policy expressly excluded such fuel. On the stated facts, the exporter had imported only fuel, had otherwise fulfilled the export obligation, and had not brought in any other raw material under the scheme. The adverse orders cancelling the licence, suspending the Import Export Code, and refusing further licence were therefore unsustainable because the authorities failed to apply the amended fuel policy and the relevant clause correctly.

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Issues: Whether the respondent was entitled to have the advance licence cancellation and Import Export Code suspension set aside on the footing that fuel imported under the advance licence was excluded from the SION norms and that the export obligation stood fulfilled.

Analysis: The policy framework permitted duty-free import of fuel for manufacturers having captive power plants, and clause 4.24.1 had to be applied in light of the amended fuel policy. Fuel imported under the advance licence was not to be taken into account while fixing the DEPB rate for the product. The respondent had imported only fuel under the advance licence, had fulfilled the export obligation, and had not imported any other raw material under that scheme. On that basis, the authorities below failed to properly appreciate the material and the cancellation, suspension, and refusal of further licence were held to be unsustainable.

Conclusion: The respondent was entitled to relief and the writ appeal had no merit.

Final Conclusion: The judgment affirms that fuel imported for captive power generation under the relevant export policy scheme could not be treated as disentitling the respondent from the benefits already claimed, and the impugned adverse orders were not liable to be sustained.

Ratio Decidendi: Where fuel imported under an advance licence is expressly excluded from DEPB computation and the export obligation is otherwise fulfilled, cancellation of the licence and allied penal consequences cannot be sustained merely because the duty-free fuel was used for captive power generation.

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