The exchange rate prevalent at the time of license issuance must be applied for calculating the export obligation under the EPCG Scheme, as specified in the policy and related circulars.

Najmi Waziri, J.

1. In this appeal, the appellant has challenged the order of the learned Single Judge dated 9th May, 2003 in CWP No.6972/2001.

2. Vide the impugned judgment, the learned Single Judge had rejected the prayer of the appellant seeking: (i) a direction that only the rate of exchange as prevailing on the date of issue of licence under the EPCG Scheme (licence no. P/CG/2127854/S/WP/19/H/90/CG1/LS dated 18th March, 1991) be used for the purpose of computing the export obligation, as provided in the import exchange policy and in the Handbook of Procedures; (ii) issuance of a direction to the respondent/Government to accept the statement of exports purported to be in fulfilment of the petitioner’s export obligation in respect of the aforesaid licence; and (iii) quashing of the respondent’s communication dated 23rd October, 2001 requiring the appellant /petitioner to re-submit the statement of exports expressing the fulfilment of their export obligation apropos the said license and also to quash the public notice No.153-ITC (PN) 90-93, dated 16th May, 1991.

3. The facts of the case are that under para 197 of the EXIM policy 1990-93 (which was given force through guidelines of 26th December, 1990 issued under REP Circular No.38/90), a license could be sought for by importers of certain capital goods for importing such goods under concessional rate of duty, subject to certain terms and conditions. One of these conditions was that the importer would comply with the requirement to export goods for a value equivalent to thrice that of the value of the capital goods imported.

4. Under the above policy, the appellant sought for and was granted permission to import certain machinery at a concessional rate of duty of 25 per cent of the CIF value of the license, which was INR Rs.7,58,94,400/- (DM 63,92,202/-). The license, issued under EPCG Scheme, cast upon the licensee an export obligation equivalent to three times the CIF value of the license. The time for fulfilment of the export obligation started from the first date of import i.e. 26th September, 1991, which was about six months before the import license was granted. On the reverse of the said license, the following obligation was stipulated:

“1) This licence has been issued under para 197 of import export policy 1990-93 Vol. I and carries an obligation to export Polyester Filament Yarn (Item of Export).

2) The additional value of export obligation to be fulfilled by the firm is US$11,600,459/-(Three times of the CIF value).

(Emphasis supplied)

5. The learned senior counsel for the appellant argued that per the terms of the import license, the applicant/appellant was required to furnish an indemnity-cum-surety bond. This was duly complied with. It has been duly undertaken by the appellant – in the said bond – that it would export the equivalent of Rs.28,07,83,760/-, which amount calculates to three times the CIF value of imported capital goods. The relevant portion of the said bond records as under:

“Whereas the Government has permitted the said importer to import Melting Extruder of Barmag type and other items as per detailed list attached, and has agreed to issue the import licence for the said melting Extruder of Barmag type and other items as per detailed list attached under the aforesaid notification of the Government of India, read with the Import and Export Policy 1990-93 (Vol. 1) and the Handbook of Procedures, 1990-93 (Vol.1) and has also granted licence No. P/CG/2127854 dated 18th March, 1991 for a value of Rs.7,58,94,400/- (DM 6,392,202/-) for the import of said Melting Extruder of Barmag type and other items as per detailed list attached on the terms and conditions specified therein, read with the terms and conditions specified in the aforesaid Notification and the Import Policy Procedures issued by the Government of India and the Chief Control of Imports and Exports, respectively. That the Importer further irrevocably undertakes and guarantees that,