The frustration of a business venture does not excuse non-performance of export obligations, and statutory levies such as customs duty are not conditional on business success or failure.

1. The petitioner has filed this writ petition under Articles 226 and 227 of the Constitution of India seeking quashing and setting aside of a letter dated 21.01.2010 whereby the Directorate General of Foreign Trade (DGFT) had communicated the decision of the EPCG Committee, taken on 12.11.2009, inter alia, rejecting the request of the petitioner for extension of period for fulfilling its export obligations and also inclusion of an alternate export product for the purpose. The said letter dated 21.01.2010 (hereinafter referred to as the ‘impugned order’) further informed the petitioner that the EPCG Committee had directed the Regional Authority to initiate action for recovery of customs duty with interest, forfeiture of Bank Guarantee and action under the Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act). The petitioner has further prayed that the respondent No. 1 be directed to take up the matter of the export obligations of the petitioner afresh.

2. The relevant facts are summarized as follows:

2.1 That the petitioner obtained an EPCG License (No. 2133843) dated 25.01.1995 for import of capital goods of a total CIF value of Rs. 1,45,24,593/- with a condition to export “Video Software” worth US$ 18,41,470/- within a period of five years/export obligation period and submit the prescribed documents towards fulfillment of their export obligation to the Regional Authority on expiry of the export obligation period. The petitioner failed to meet these obligations, hence a Show Cause Notice dated 27.02.2004 was issued to the petitioner. Thereafter, the Adjudicating Authority on 14.03.2006 proceeded to impose a fiscal penalty of Rs. 66,93,238/-, in addition to the payment of customs duty along with interest, for non- fulfillment of export obligation against the EPCG License No. 2133843 dated 25.01.1994.

2.2 Aggrieved by the above mentioned order, the petitioner preferred an appeal. The said appeal was disposed of by the Addl. Director General of Foreign Trade by an order dated 08.06.2006, which held that the petitioner’s failure to fulfill its export obligations was due to circumstances beyond its control and that the petitioner was a sick industrial unit. The order dated 14.03.2006 was set aside and the matter was remanded to the Jt. DGFT for de novo consideration. Further, an extension was granted to the petitioner for 18 months from the date of endorsement of the licensing authority without composition fee and benefits of paragraph 5.4(i) of the then existing Foreign Trade Policy was extended to the petitioner. Apparently, this implied that subject to certain conditions, the petitioner was permitted to fulfill its export obligations by exporting an alternate export product, either by itself or through its group company.

2.3 The period for discharging the export obligations was extended by an endorsement on 13.09.2007 for a period of eighteen months therefrom. Concededly, the petitioner failed to export any product during the extended period and once again approached the DGFT, by its letter dated 19.03.2009, seeking inclusion of an alternate export product as well as further extension of time, by 18 months, to meet its export obligations. This request was considered by the EPCG Committee on 12.11.2009 and was rejected. The decision of the EPCG Committee was communicated to the petitioner by the impugned order. The EPCG Committee held that “the firm has already availed an E.O. Extension for fourteen and a half years and still could not make any export.” and accordingly, declined the petitioner’s request for extension of time and for inclusion of an alternate export product. The Committee also directed the Regional Authority to initiate immediate action for recovery of customs duty with interest, forfeiture of bank guarantee and action under FTDR Act and also for conducting a physical verification of imported machinery at the petitioner’s premises.

3. The petitioner company stated that it could not perform