2018 (11) TMI 105 - HC - Customs

High Court orders reevaluation by EPCG Commission on export obligations, emphasizing fairness and legal compliance

M/s. S.S.D. Oil Mills Company Limited Versus The Assistant Director General of Foreign Trade, The Joint Director General of Foreign Trade, Additional Director General of Foreign Trade, Director General of Foreign Trade And Export Promotion Capital Goods (EPCG) Committee Director General of Foreign Trade

The High Court directed a reevaluation by the EPCG Commission regarding a petitioner's fulfillment of export obligations for specific goods, citing ... Non-Fulfilment of export obligation - EPCG Scheme - export of Vanaspathi and Margarine as per EPCG authorisation license granted - petitioner claims that export of such product to be considered as an alternative product for granting the benefit under the EPCG licence. The Original Authority rejected their claim on the reason that the petitioner is not producing any export documents in support of the export obligation. Held that:- Since it is the claim of the petitioner that 30% of the Vanaspathi was already exported during the said period, certainly, it is for the fifth respondent to consider the said claim once again by inviting the petitioner to place all the relevant materials in support of such claim. The second reason stated in the impugned order is that the petitioner made the benefit under the EPCG licence after its expiry - the learned counsel for the petitioner invited this Court's attention to Clause 5.11.3 of Export Promotion Capital Goods Scheme in Handbook of Procedures to contend that if there is any ban in respect of a particular products the period during which such ban is in operation, has also to be given as an extension period for the licence and therefore, the claim made by the petitioner is in order. This again is a matter for the fifth respondent to consider and decide on merits after hearing the petitioner. When it is contended by the respondent that the said provision was notified in the year 2004 and the same cannot be applied retrospectively, the petitioner's claims that in view of the decision taken in the minutes of the EPCG committee held on 23.09.2010, such permission has to be applied retrospectively to all those who hold EPCG licence. Therefore, this again is a matter for the fifth respondent to consider the matter afresh after hearing the petitioner. The fifth respondent shall have to consider the matter once again afresh after giving an opportunity of hearing to the petitioner - petition allowed by way of remand. Issues Involved:1. Interpretation of EPCG authorizations and export obligations.2. Consideration of alternative export products.3. Application of regulations and provisions retrospectively.4. Review of adjudication process and imposition of penalties.Issue 1: Interpretation of EPCG authorizations and export obligations:The petitioner, engaged in import and export, obtained EPCG authorizations for specific goods with an obligation to export Vanaspathi and Margarine. Due to a ban on edible oil exports, they exported Cotton Seed Hulls and Cotton Linters instead. The authorities alleged non-compliance with export obligations and imposed penalties. The petitioner claimed to have fulfilled 30.19% of the obligation and sought consideration of alternative products. The appellate authority rejected this claim, citing lack of provision for alternative product fulfillment. The High Court noted discrepancies in the adjudication process and directed a reevaluation by the EPCG Commission.Issue 2: Consideration of alternative export products:The petitioner argued that the export of Cotton Seed Hulls and Cotton Linters should be accepted as an alternative to Vanaspathi and Margarine. The authorities contended that the petitioner failed to initiate export obligations for alternative products promptly. The High Court observed that the EPCG Committee had allowed retrospective consideration of alternative products for license holders. It directed the authorities to reexamine the matter, considering the petitioner's submissions and relevant regulations.Issue 3: Application of regulations and provisions retrospectively:The High Court addressed the retrospective application of regulations, emphasizing that the authorities should consider the petitioner's claims in light of relevant provisions and the EPCG Committee's decisions. It instructed the authorities to review the matter after hearing the petitioner and ensuring compliance with the law and regulations.Issue 4: Review of adjudication process and imposition of penalties:The High Court scrutinized the adjudication process and penalties imposed on the petitioner for alleged non-compliance with export obligations. It found discrepancies in the reasoning provided by the authorities and directed a fresh evaluation by the EPCG Commission. The Court emphasized the need for a fair hearing and adherence to legal provisions in resolving the matter.This detailed analysis of the judgment highlights the complexities surrounding EPCG authorizations, export obligations, consideration of alternative products, retrospective application of regulations, and the review of adjudication processes. The High Court's decision underscores the importance of fair proceedings, compliance with regulations, and thorough examination of claims in matters concerning trade obligations and penalties.