Import of cars under EPCG Scheme

PJ/Case Laws/2011-12/1228

Case: Shri Jayant Malhotra and another Versus CC, New Delhi

Citation: 2011-TIOL-784-CESTAT-DEL

Issue: - Import of cars under EPCG Scheme – cars sold or utilised for other purpose after obtaining EODC from DGFT – allegation of violation of Customs Notifications not sustainable.

Brief Facts: - Appellants imported cars under EPCG Scheme as service provider under the Tour Operator category at concessional rate of duty. Customs Authorities alleged that the appellants were misusing the same, since the said imported cars were not being used for the intended purpose. It was also alleged that the export obligation with respect to two vehicles have been fraudulently fulfilled from the foreign exchange earned from the air ticketing services and even one of the two cars was sold in violation to the conditions as laid down in EPCG Scheme and relevant Customs Notification.
During the course of investigation, the appellants submitted that as they have obtained export obligation discharged certificate from the DGFT, they have not violated the conditions of the notifications, hence the proceedings may be dropped.
Department issued Show Cause Notice to the appellants for violation of the Foreign Trade Regulation Rules. Demands were confirmed against the appellant and penalties were imposed on them. Aggrieved from the said order, the appellants have filed this appeal.

Appellant’s Contention: - After the fulfillment of export obligation, the appellant submits the application for redemption of EPCG licences. The necessary foreign exchange into the remittance service were duly issued by the authorised dealer showing remittance of proceeds in foreign exchange and same were submitted to the licencing authority, on being satisfied with the fulfillment of export obligation, the licencing authority issued export obligation discharged certificate and after getting the EODC, the Customs Authorities cancelled the Bank guarantee and the said vehicle was sold.
In case of second vehicle the DGFT was pleased to drop the Show Cause Notice after being satisfied that export obligation has been duly discharged by the appellant. Appellant submitted that in respect of both the vehicles in question, the appellants have discharged their export obligation as per the licence issued under EPCG Scheme. Hence the proceedings under the impugned Show Cause Notice are to be quashed. As the EPCG licence were issued correctly and the appellants have discharged the export obligation also correctly.
Appellant relied on the case ofAir Travel Bureau Ltd. vs. CC reported in 2010 (260) ELT 78 (Del.).

Reasoning of the Judgment: The Tribunal found that in the cars were imported by the appellants under EPCG Scheme and after discharging their export obligation the DGFT has issued (EODC) Export obligation discharged certificate as per EXIM policy. The cases against the appellants have been made out for violation of Custom Notification No. 44/2002 and 55/2003.
The Tribunal have gone through the decision of Air Travel Bureau Ltd wherein the High Court has confirmed the decision of this Tribunal reported in 2009 (237) ELT 283 (Tri.-Del.) wherein this Tribunal has held that the assessee have been able to fulfill the obligation under EPCG licence which was the very condition imposed in the said licence by DGFT. DGFT redeemed the licence and has taken a view that the assessee has fulfilled their export obligation.
There is no doubt the opinion of the DGFT would not be conclusive and any such certificate cannot stop the power of the authority to reopen even a concluded matter, if it is shown that the such conclusion was vitiated by fraud, concealment of facts or misrepresentation or misdeclaration which was not been in that case. Therefore, the matter was decided in favour of the assessee.
Admittedly, in this case also there is no allegation against the appellants that they have obtained export obligation discharge certificate by way of fraud, concealment of facts or mis-representation or mis-declaration. The certificate from DGFT was after verifying the facts that the appellants have fulfilled the conditions of the notification. Hence, following the decision of Air Travel Bureau Ltd, the Tribunal found that in these matters also the appellants have been able to discharge their export obligation and obtained the certificate from DGFT after following the provisions of law. Impugned Order is set aside.

Decision: Appeal allowed.

Comment:- DGFT is prime authority in issue of EPCG and when they have issued redemption certificate then custom department

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PJ/Case Laws/2011-12/1228

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