2025 (7) TMI 500 - HC - Customs

Challenge to proceedings - failure to fulfill obligations under EPCG license scheme - relevant documents were not submitted on time - rejection of appeals on the ground that it is barred by limitation by relying upon Section 15(1)(b) of Foreign Trade (Development and Regulation) Act 1992 - HELD THAT - Even if Section 15(1)(b) of the Act is given a wider interpretation this Court wanted to see as to whether the petitioner after having knowledge of the order passed by the 2nd respondent had immediately approached the 1st respondent and filed an appeal. However that has not happened in this case. The petitioner was informed about the order dated 21.07.2016 on 06.11.2017 and the same is evident from the communication made by the Deputy Director General of Foreign Trade and even thereafter the petitioner waited for nearly two years and filed the appeals only on 17.10.2019. Therefore even if the limitation is calculated from the date of knowledge it is well beyond the period of limitation prescribed under the Act. The reasons given by the petitioner for not having been able to file the relevant form in spite of completing the export obligation is not an issue that can be gone into in the present writ petitions. This is in view of the fact that the petitioner after fulfilling the export obligation is also expected to file the relevant form in order to enable the authorities to act upon the same. If it has not been done the fulfillment of export obligation will only remain to be an ipse dixit without any document substantiating the same. The enormous delay on the part of the petitioner in approaching the authorities becomes fatal for the petitioner and this Court does not find any ground to interfere with the proceedings of the 1st and 2nd respondents. This Court finds no merit in these writ petitions and accordingly they stand dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the petitioner fulfilled the export obligation under the EPCG license within the stipulated period and complied with the procedural requirement of submitting FORM ANF-5B in a timely manner.

- Whether the delay in submission of FORM ANF-5B and the consequential failure to file appeals within the prescribed limitation period under Section 15(1)(b) of the Foreign Trade (Development and Regulation) Act, 1992, can be condoned.

- Whether the orders passed by the 2nd respondent imposing penalty and the dismissal of appeals by the 1st respondent on limitation grounds are legally sustainable.

- Whether the petitioner is entitled to a Redemption Certificate upon submission of FORM ANF-5B after the expiry of the limitation period and after penalty orders have been passed.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Compliance with Export Obligation and Submission of FORM ANF-5B

Relevant legal framework: The EPCG Scheme requires the licensee to fulfill export obligations within eight years and submit the relevant documents in FORM ANF-5B to the competent authority to obtain a Redemption Certificate. The Foreign Trade (Development and Regulation) Act, 1992, governs procedural compliance.

Court's interpretation and reasoning: The Court acknowledged the petitioner's claim of having fulfilled the export obligation within a year of import (in 2007). However, the petitioner failed to submit FORM ANF-5B timely, which is a mandatory procedural requirement. The petitioner's business closure in 2007 and sale of the factory in 2014 further delayed compliance. The Court emphasized that fulfillment of export obligation without documentary proof through FORM ANF-5B remains unsubstantiated and cannot be accepted ipse dixit.

Key evidence and findings: The petitioner submitted FORM ANF-5B only on 19.09.2017, after a considerable delay. The 2nd respondent had already adjudicated the matter on 21.07.2016 and imposed penalties due to non-compliance and non-appearance during enquiry.

Application of law to facts: The Court held that non-submission of FORM ANF-5B constitutes a default and justifies penalty imposition. The procedural lapse cannot be overlooked even if the export obligation was otherwise fulfilled.

Treatment of competing arguments: The petitioner argued that export obligations were met and documents were delayed due to business closure. The Court rejected this as irrelevant to the mandatory procedural compliance and emphasized the necessity of timely submission for enforcement.

Conclusion: The petitioner failed to comply with the procedural requirement of submitting FORM ANF-5B within the stipulated period, amounting to a default under the EPCG Scheme.

Issue 2: Limitation for Filing Appeals under Section 15(1)(b) of the Act

Relevant legal framework: Section 15(1)(b) of the Foreign Trade (Development and Regulation) Act, 1992, prescribes that appeals against orders passed by licensing authorities must be filed within 45 days of the order or its service, with a maximum condonation of delay of 30 days.

Court's interpretation and reasoning: The Court upheld the 1st respondent's rejection of the petitioner's appeals dated 17.10.2019 as barred by limitation. The Court noted that the petitioner was informed of the penalty order dated 21.07.2016 by 06.11.2017, yet did not file appeals until nearly two years later. The statutory limitation period is mandatory and cannot be extended beyond the prescribed maximum.

Key evidence and findings: Communication dated 06.11.2017 from the Deputy Director General of Foreign Trade confirmed the petitioner's knowledge of the order. The appeals filed on 17.10.2019 were clearly beyond the limitation period.

Application of law to facts: The Court applied the limitation provisions strictly and found no justification for condoning such a prolonged delay. Even a liberal interpretation of the limitation period did not favor the petitioner.

Treatment of competing arguments: The petitioner sought to rely on delayed knowledge or other reasons for late filing. The Court rejected these, emphasizing statutory limitation as a bar to jurisdiction.

Conclusion: The appeals filed by the petitioner were time-barred under Section 15(1)(b) of the Act and rightly dismissed by the 1st respondent.

Issue 3: Validity of Penalty Orders Passed by the 2nd Respondent

Relevant legal framework: The 2nd respondent is empowered to adjudicate defaults under the EPCG Scheme and impose penalties for non-compliance, including failure to submit required forms within the prescribed time.

Court's interpretation and reasoning: The 2nd respondent passed orders on 21.07.2016 after attempts to serve show cause notices and due enquiry where the petitioner did not appear. The Court found that the 2nd respondent acted within authority and on the available materials.

Key evidence and findings: The petitioner did not participate in the enquiry, leading to penalty imposition based on record. The delay in submission of FORM ANF-5B and failure to respond to notices justified the penalty.

Application of law to facts: The Court held that procedural non-compliance and non-appearance warranted penalty and the 2nd respondent's orders were valid.

Treatment of competing arguments: The petitioner's contention that export obligation was fulfilled and documents were delayed was not a defense against procedural default and penalty.

Conclusion: The penalty orders passed by the 2nd respondent are legally sustainable.

Issue 4: Entitlement to Redemption Certificate after Delay and Penalty

Relevant legal framework: Redemption Certificate issuance is contingent upon fulfillment of export obligation and timely submission of FORM ANF-5B. Delay and penalty affect eligibility.

Court's interpretation and reasoning: Since the petitioner failed to submit FORM ANF-5B within the prescribed period and did not file timely appeals, the Court held that the petitioner is not entitled to a Redemption Certificate at this stage.

Key evidence and findings: The petitioner's delayed submission and failure to challenge penalty orders within limitation bars relief.

Application of law to facts: The Court found no ground to direct issuance of Redemption Certificate after such delay and penalty imposition.

Treatment of competing arguments: The petitioner's claim of export obligation fulfillment does not override mandatory procedural compliance and limitation.

Conclusion: The petitioner is not entitled to a Redemption Certificate under the circumstances.

3. SIGNIFICANT HOLDINGS

"The petitioner is bound by the conditions imposed under the EPCG license issued in his favour. Even though the petitioner claims that he had fulfilled the export obligations, admittedly, the forms were not filed and thereby, the petitioner has not complied with the formalities as required."

"Non fulfillment in filing the relevant form, by itself, is a default on the part of the petitioner and that itself will result in imposition of penalty."

"In order to entertain an appeal, it has to be filed within a period of 45 days from the date on which the decision was made or when the order was served and the 1st respondent will be able to condone the delay of only a maximum of 30 days thereafter. Beyond this period, the 1st respondent is not vested with the power to condone the delay."

"The enormous delay on the part of the petitioner in approaching the authorities becomes fatal for the petitioner and this Court does not find any ground to interfere with the proceedings of the 1st and 2nd respondents."

Core principles established include the strict enforcement of procedural compliance under the EPCG Scheme, the mandatory nature of limitation periods under the Foreign Trade Act, and the non-entitlement to relief where statutory conditions are not met despite substantive fulfillment claims.

Final determinations: The Court dismissed the writ petitions, upheld the penalty orders, and affirmed the dismissal of appeals on limitation grounds, thereby denying the petitioner's request for Redemption Certificate.