High Court upholds EPCG order, company can seek verification. Penalty waived for non-utilization. Recovery subject to Director's orders.

The High Court of Madras upheld the order-in-original challenged by a company regarding the Export Promotion Capital Goods Scheme (EPCG). The court allowed the company to pursue its representation before the Joint Director General of Foreign Trade for verification of the EPCG licence and non-utilization certificate. If non-utilization is confirmed, the penalty will be waived. Recovery action for the penalty was directed to be subject to the orders of the Joint Director General. The court disposed of the writ petitions without costs, closing the related miscellaneous petitions.

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Issues: Challenge to order-in-original under EPCG scheme for non-compliance, surrender of original licence, verification of non-utilization certificate, levy of penalty, recovery action, and directions for further proceedings.

The High Court of Madras heard a case where a company, the petitioner, challenged an order-in-original issued by the Joint Director General of Foreign Trade regarding the Export Promotion Capital Goods Scheme (EPCG). The petitioner had applied for a licence under the EPCG for importing capital goods and was issued a licence as a service provider. The licence required the petitioner to produce and supply electricity generated from the imported goods using conventional fuel to the consumer, as per specified conditions within 8 years. A show cause notice was issued for alleged non-compliance of the licence conditions. The petitioner claimed non-utilization of the licence and sought time to provide evidence. However, the impugned order was passed based on the alleged violation. The petitioner later surrendered the original licence and represented that it was never used for import clearance.

After reviewing the facts, the court noted that the original licence was obtained by the petitioner post the impugned order. The Asstt. Commissioner of Customs confirmed the non-registration of the TRA but did not deny the surrender of the original licence and non-utilization certificate. The court, while upholding the impugned order, allowed the petitioner to appear before the Joint Director General of Foreign Trade to pursue the representation and directed verification of the records to determine the validity of the EPCG licence and non-utilization certificate. If the authority confirms the non-utilization of the licence, the penalty will be dropped.

Regarding another writ petition concerning recovery action for the penalty imposed, the court directed that the recovery action would be subject to the orders passed by the Joint Director General of Foreign Trade in line with the previous directions. The court concluded by ordering the writ petitions as mentioned without any costs, and the connected miscellaneous petitions were closed.

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