Penalty under export control law requires clear attributable breach; permissions, waivers, and project delays defeated liability.

Penalty under Section 4-I of the Imports and Exports (Control) Act, 1947 was found unsustainable where project delay, changes at the foreign collaborator's end, and repeated permissions and waivers for debonding and domestic sale were not properly considered. The record did not show any intentional or direct breach attributable to the petitioner, and liability for penalty required a clear violation of licence conditions. On that basis, invocation of the penal provision was treated as arbitrary and illegal, and the penalty was set aside.

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Issues: Whether the penalty imposed under Section 4-I of the Imports and Exports (Control) Act, 1947 was legally sustainable on the facts, and whether the petitioner could be held liable for alleged non-fulfilment of export obligations.

Analysis: The Court found that the delay in implementation of the project, the changes at the foreign collaborator's end, and the repeated permissions and waivers granted by the authorities for withdrawal from the 100% export oriented unit scheme were material circumstances that had not been properly considered. The authorities had themselves acted on the petitioner's applications for debonding and domestic sale, and the record did not show any intentional or direct violation attributable to the petitioner. In these circumstances, the penal provision could not be invoked as a matter of course, because liability to penalty required a clear and attributable breach of the licence conditions.

Conclusion: The invocation of Section 4-I was held to be arbitrary and illegal, and the penalty was unsustainable; the petitioner succeeded.

Ratio Decidendi: A penalty provision cannot be applied unless the alleged violation is clearly attributable to the person proceeded against, and the authority must consider the surrounding circumstances, including permissions and waivers already granted, before imposing penal liability.

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