Export obligation default under advance licences: court upheld liability but reduced penalty because the matter was stale and records were unavailable.

Failure to fulfil export obligations under advance licences justified maintaining the finding of default, as winding up and change in management did not erase liability. However, the age of the matter, non-availability of records despite requests, and the resulting unfairness in answering the show cause notice were relevant to penalty quantum. On these peculiar facts, the Bombay HC declined to disturb the default finding but reduced the penalty from Rs. 11 lakhs to Rs. 2.50 lakhs, granting partial relief to the petitioner.

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Issues: Whether the penalty imposed for failure to fulfil export obligations under the advance licences should be interfered with in view of the age of the matter, change in management, and non-availability of records.

Analysis: The liability to penalty was not displaced merely because the company had undergone winding up and a change in management, but those facts were relevant to the quantum of penalty. The matter was stale, the records were not made available despite requests, and these circumstances affected the fairness of requiring the petitioner to answer the show cause notice after a long lapse of time. In these peculiar facts, the Court declined to disturb the finding of default but considered it to modify the penalty.

Conclusion: The penalty was reduced from Rs. 11 lakhs to Rs. 2.50 lakhs and the petition was disposed of partly in favour of the petitioner.

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