Sustainability of SCN for Customs Rules violation when EODC issued by DGFT

PJ/Case Laws/2011-12/1432

Case: M/s ONKAR INTERNATIONAL PVT LTD Vs CC, NEW DELHI

Citation: 2011-TIOL-784-CESTAT-DEL

Issue:- SCN for violation of customs notification – Not sustainable when Export Obligation fulfilled and EODC issued by DGFT.

Brief Facts:- Appellant imported cars under EPCG Scheme as service provider under the Tour Operator category at concessional rate of duty. It was alleged that they were misusing the exemption claimed, 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.

Investigation was initiated. During the course of investigation, 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.

But a Show Cause Notice was issued to them alleging violation of the Foreign Trade Regulation Rules. Demands were confirmed against the main appellant and penalties were imposed on appellants as well as the co appellants.

Aggrieved from the said order, appellants are before the Tribunal.

Appellant’s Contention:- Appellant submitted that after the fulfilment 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 fulfilment 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. Reliance was placed on Air Travel Bureau Ltd. Vs. CC [2010 (260) ELT 78 (Del.)].

Reasoning of Judgment:- The Tribunal found that it is a fact on record that these cars were imported by the appellants under EPCG Scheme and after discharging their export obligation the DGFT has issued Export obligation discharged certificate (EODC) 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 perused the decision of Air Travel Bureau Ltd wherein the High Court had 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 fulfil 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. 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. Accordingly, no case can be made out against the appellant for violation of customs notifications. Impugned order set aside.

Decision:- Appeal allowed.

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PJ/Case Laws/2011-12/1432

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