Court overturns DGFT's export obligation changes under EPCG scheme, directs adherence to original terms.

The court held that the DGFT's clarification and amendment of the export obligation under the EPCG scheme were not in line with the FTP 09-14. The export obligation should be based on the duty saved, as per the original authorization. The impugned clarification and amendment were set aside, and the DGFT was directed to process the petitioner's application for discharge/closure based on the original terms of the authorization. The petition was allowed, and each party was to bear their own costs.

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Issues Involved:
1. Clarification of export obligation under the EPCG scheme.
2. Amendment of the EPCG Authorisation.
3. Jurisdiction and power of DGFT to amend the Authorisation.
4. Applicability and interpretation of Policy Circulars in relation to FTP 09-14.

Detailed Analysis:

1. Clarification of Export Obligation under the EPCG Scheme:
The petitioner contested a clarification dated 22.03.2016, which mandated the export obligation to be equivalent to six/eight times the depreciated value of assets upon shifting to the EPCG scheme. The petitioner argued that their export obligation under FTP 09-14 was six times the duty saved on capital goods, not their depreciated value. The court examined the relevant provisions of FTP 09-14 and concluded that the export obligation should be computed as a multiple of the duty saved, not the depreciated value of the capital goods.

2. Amendment of the EPCG Authorisation:
The petitioner received an EPCG Authorisation based on the duty saved, which was later unilaterally amended by DGFT to reflect a higher export obligation based on depreciated value. The court noted that the initial authorisation was issued correctly per the FTP 09-14 and that the subsequent amendment by DGFT was not justified. The court emphasized that DGFT could not alter the FTP provisions and that the export obligation should be based on the duty saved.

3. Jurisdiction and Power of DGFT to Amend the Authorisation:
The petitioner argued that DGFT lacked the jurisdiction to amend the authorisation after the petitioner had fulfilled the specified export obligation. The court did not delve deeply into this issue, as it found the amendment itself to be contrary to the FTP 09-14. However, the court acknowledged that DGFT's role is to implement the FTP, not to modify it.

4. Applicability and Interpretation of Policy Circulars in Relation to FTP 09-14:
The court examined various circulars, including Circular no. 84 dated 30.04.2009, which DGFT relied upon to justify the amended export obligation. The court found that this circular erroneously incorporated provisions from an earlier circular (Circular no. 35 dated 01.10.1999) that were no longer applicable under the updated FTP 09-14. The court concluded that the reference to export obligation as six/eight times the depreciated value in Circular no. 84 was incorrect and could not override the FTP 09-14.

Reasoning and Conclusion:
The court held that the DGFT's clarification and subsequent amendment of the export obligation were not in accordance with the FTP 09-14. The correct export obligation should be based on the duty saved, as initially authorised. The court set aside the impugned clarification dated 22.03.2016 and the licence amendment sheet dated 23.01.2014. The DGFT was directed to consider the petitioner's application for discharge/closure of the EPCG authorisation based on the original terms.

Final Judgment:
The petition was allowed, and the impugned DGFT clarification and amendment were set aside. The DGFT was instructed to process the petitioner's application for discharge/closure of the EPCG authorisation per the original authorisation dated 13.06.2011, as amended on 04.08.2011. The parties were left to bear their own costs.

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