Court rules in favor of EPCG license holder in customs duty dispute

The Court ruled in favor of the petitioner, an EPCG license holder, in a case challenging impugned notices for customs duty and interest issued years after obtaining Export Obligation Discharge Certificates. The Court held that the second respondent lacked jurisdiction to review orders under Section 16 of the FTDR Act, emphasizing that only the Director General of Foreign Trade has such authority. It also determined that the limitation period for review starts from the date of the decision, not from the demand notices, and dismissed the argument that failure to opt for a personal hearing barred seeking relief through Writ Petitions. The Court quashed the impugned notices, affirming the petitioner's entitlement to relief.

---

---

Issues:
Challenge to impugned notices issued for recovery of customs duty and interest after lapse of many years from the Export Obligation Discharge Certificate (EOD) issuance.
Jurisdiction of the second respondent to review his own order under Section 16 of the Foreign Trade (Development and Regulation) Act, 1992.
Validity of the impugned notices beyond the two-year limitation period prescribed under Section 16 of the Act.
Availability of alternate remedy of personal hearing before challenging the impugned notices through Writ Petitions.

Analysis:
In the present case, the petitioner, an Export Promotion and Capital Goods (EPCG) license holder, imported capital goods at a concessional rate of customs duty for manufacturing export items. After fulfilling the export obligation, the petitioner applied for redemption of the EPCG license and obtained Export Obligation Discharge Certificates (EOD) between 2006 and 2008. However, several years later, impugned notices were issued by the second respondent to recover customs duty and interest, prompting legal challenge.

The primary contention raised by the petitioner's counsel was the lack of jurisdiction of the second respondent to review his own order without explicit statutory provision. The counsel argued that Section 16 of the FTDR Act empowers the Director General of Foreign Trade, not the second respondent, to review orders. The petitioner further contended that the impugned notices, issued after about a decade from the EOD issuance, violated the two-year limitation period prescribed under Section 16 for review.

Contrary to the petitioner's arguments, the Additional Solicitor General contended that the limitation period should commence from the date of the demand notices, not the EOD issuance. Additionally, the respondents alleged that the petitioner's failure to avail the option of personal hearing before filing the Writ Petitions should lead to their dismissal based on non-availing of an alternate remedy.

The Court, after detailed analysis, upheld the petitioner's contentions. It emphasized that the power to review orders under Section 16 lies with the Director General, not the second respondent. Referring to relevant case law, the Court highlighted that the impugned notices were issued without jurisdiction and contrary to statutory provisions. Regarding the limitation issue, the Court rejected the argument that the two-year period should commence from the demand notices, emphasizing that it starts from the date of the decision or order to be revised.

Moreover, the Court dismissed the notion that the petitioner's failure to opt for personal hearing barred them from seeking relief through Writ Petitions. It reiterated that when a notice is issued without jurisdiction, the Court can intervene under Article 226 of the Constitution. Consequently, the Court quashed the impugned notices and allowed the Writ Petitions, emphasizing the petitioner's entitlement to relief despite not availing the option of personal hearing.

In conclusion, the judgment highlighted the importance of adhering to statutory provisions, jurisdictional limitations, and the availability of judicial remedies in challenging administrative actions to protect the rights of the parties involved.

---