2018 (11) TMI 626 - HC - Customs

EPCG Scheme - fulfillment of export obligation - principles of natural justice - Held that - Pursuant to the directions issued by the Department, the petitioner has submitted the ample proof to show that he has fulfilled the export obligations pursuant to the licence granted to him and that is also accepted by the officials of the respondent Department and a certificate to that effect was also issued. Further, consequent to the certificate issued, the bond/bank guarantee executed by the petitioner was also cancelled. While the matter stood thus, the second respondent without application of mind, had proceeded as if the petitioner has not fulfilled the export obligations and the impugned order came to be passed because of sheer non-application of mind. Impugned order set aside - petition allowed.

Summary

Issues:
1. Compliance with Export Promotion Capital Goods (EPCG) License obligations.
2. Alleged failure to fulfill export obligations leading to penalty and arrears demand.

Compliance with Export Promotion Capital Goods (EPCG) License obligations:
The petitioner held an EPCG License and was required to comply with Export Obligation Performance. The petitioner submitted necessary documents to fulfill export obligations, which were certified by the respondents. The Assistant Commissioner canceled the Bond/LUT/Bank Guarantee, signifying compliance. However, the second respondent issued a show cause notice alleging non-compliance, leading to Order-in-Original No. 37/2017. The court found that the petitioner had indeed fulfilled obligations as per the certificate and canceled bond, indicating a lack of application of mind by the second respondent. Consequently, the impugned order was set aside.

Alleged failure to fulfill export obligations leading to penalty and arrears demand:
Despite the petitioner fulfilling export obligations and having the necessary certification, the third respondent demanded arrears, penalty, and redemption fine based on the impugned Order-in-Original No. 37/2017. The petitioner contested this demand, highlighting the fulfillment of obligations. The court, upon reviewing the records, found that the petitioner had adequately demonstrated compliance with export obligations as required by the EPCG License. The court set aside the impugned order, thereby relieving the petitioner of the demanded arrears, penalty, and redemption fine.

In conclusion, the High Court of Madras, in the judgment delivered by M. Govindaraj, J., allowed the writ petition, setting aside the impugned Order-in-Original No. 37/2017 dated 31-7-2017. The court found that the petitioner had fulfilled the export obligations as per the EPCG License requirements, as evidenced by the certification and cancellation of the bond. The court noted the lack of application of mind by the second respondent in issuing the impugned order, leading to its overturning. The judgment relieved the petitioner of the demanded arrears, penalty, and redemption fine, closing the connected writ miscellaneous petitions without costs.