The execution of the bond in terms of the licence under the Foreign Trade (Development and Regulation) Act, 1992, created a contractual obligation, allowing the authority to demand interest from the exporter for failure to fulfill the export obligation.

1. In exercise of the powers conferred by sub-section (1) of Section 25 of the Customs Act, 1962, in the public interest, the Central Government issued a notification exempting capital goods, when imported into India by an importer specified in column (2) of the notification, from so much of the duty of customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975, as is in excess of amount calculated at the rate specified in the corresponding entry in column (3) of the said notification and the whole of the additional duty leviable thereon under Section 3 of the Customs Tariff Act, subject to certain conditions.

2. One such condition enumerated in the notification is that the importer, at the time of clearance, shall produce to the Assistant Commissioner of Customs or Deputy Commissioner of Customs a certificate from the licensing authority for having executed a bond under paragraph 45 of the Policy.

3. The term, "Licensing Authority", has been explained in the very same notification, which reads as follows:-

"(iii)"Licensing Authority" means an authority competent to grant a licence under the Import (Control) Order, 1955, made under the Imports and Exports (Control) Act, 1947 (18 of 1947), or the Director General of Foreign Trade appointed under the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992) or an officer authorised by him to grant a licence under the said Act."

4. The term, "Export and Import Policy" also has been explained in the same notification as follows:-

"(ii)"Export and Import Policy" means the Export and Import Policy, 1 April 1992-31 March 1997 published vide Public Notice of the Government of India in the Ministry of Commerce, No.1-ITC (PN) 92-97, dated the 31st March 1992, as amended from time to time."

5. Yet another condition of the said notification is that the importer, at the time of clearance of the said capital goods shall make a declaration before the Assistant Commissioner of Customs or Deputy Commissioner of Customs, in such form as he may specify, binding himself to pay on demand an amount equal to the duty leviable on such capital goods but for the exemption contained herein in respect of which the conditions specified in column (2) of the notification have not been complied with.

6. As per the above said notification, an importer has to fulfil his export obligation within the time prescribed in the licence. The petitioner is a Company, by name, "M/s. FAL Industries Limited", who was manufacturing various products, including Typewriters and Air Purifiers. The petitioner Company was also involved in export of the above products. The petitioner Company obtained licence from the first respondent/Directorate General of Foreign Trade, bearing No.P/CG/2100700, dated 27.08.1992, under the Scheme, known as, "Export Promotion Capital Goods Scheme" (hereinafter referred to as, "The Scheme"). As per the terms of the licence, the petitioner Company could import goods worth CIF value of Rs.64,27,044/-. As per the terms of the licence, the machinery to be imported would be eligible for concessional rate of interest at 15%, in terms of the Customs Notification No. 160/92, dated 20.04.1992.

7. In terms of the above licence, admittedly, the petitioner Company imported materials under Bill of Entry No.44076, dated 22.12.1992, for a CIF value of Rs.59,59,050/-and paid concessional customs duty of Rs.8,68,724/-. As per the terms of the licence and notification, the petitioner duly executed a bond, thereby undertaking to pay interest at the rate of 24%, in the event of failure to fulfil the export obligation in terms of the licence. Admittedly, the petitioner Company did not fulfil the above export obligation as per the terms of the licence. Therefore, the second respondent/Deputy Director General of Foreign Trade, by his proceedings in F.No.20/66/93/EPCG.III, dated 26.11.2002, demanded interest at the rate of 24%, which works out to Rs.64,87,912/-. T