Court orders EPCG Committee review of application, permits customs to encash bank guarantee.

The Court directed the EPCG Committee to review the petitioners' application within four weeks, while allowing customs to encash the bank guarantee. The amount was to be held separately pending the Committee's decision, with a prompt refund if in favor of the petitioners. The judgment underscores the significance of meeting export obligations, the EPCG Committee's authority in trade policy, and procedural fairness in customs duties and bank guarantee enforcement.

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Issues:
1. Non-fulfillment of export obligation against imported goods.
2. Encashment of bank guarantee by customs authorities.
3. Jurisdiction of EPCG Committee to amend trade policy.

Analysis:
1. The petitioners completed construction of a hotel in 2011 with an investment of Rs. 200 Crores, including goods imported against 50 EPCG licenses. The hotel was ready for operation in 2012, but due to objections, the occupation certificate was issued in 2018 by the Supreme Court's order. The project failed, and the property was sold under SARFAESI Act. Customs initiated recovery proceedings in 2019 for non-fulfillment of export obligation, directing the bank guarantee's encashment in 2020. The petitioners applied for relaxation of import conditions in August 2020, pending before the EPCG Committee.

2. The petitioners sought a stay on the bank guarantee encashment, citing legal precedents and public notices. The Union of India argued that the petitioners were aware of the export obligation failure since 2017 but applied to the EPCG Committee in 2020, knowing the committee's limitations. Customs authorities stated that the property linked to the import and export obligation was already alienated, indicating no intention to fulfill obligations. Despite a notice in 2019, the petitioners delayed action until the bank guarantee encashment process began.

3. The Court refrained from delving into the case's merits due to the pending application. It directed the EPCG Committee to review the petitioners' August 2020 application within four weeks, providing a reasoned order after hearing all parties. While allowing customs to encash the bank guarantee, the realized amount must be held separately until the EPCG Committee's decision. If in favor of the petitioners, the customs department should promptly refund the amount. The writ petition was disposed of without costs, and no affidavits were invited, assuming the respondents denied the allegations.

This judgment emphasizes the importance of fulfilling export obligations, the authority of the EPCG Committee in trade policy matters, and the procedural fairness in handling customs duties and bank guarantees.

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