The exports made under one EPCG license could be adjusted for other EPCG licence to fulfill export obligation thereunder?

PJ/Case Laws/2010-11/1018

Case: Commissioner of Customs, Chennai v/s M/s Ford (India) Pvt Ltd

Citation: 2010-TIOL-1637-CESTAT-MAD

Issue:- Whether the exports made under one EPCG license could be adjusted for other EPCG licence to fulfill export obligation thereunder?

Brief Facts:- Respondents obtained two EPCG licenses for import of capital goods duty-free against export obligation to be met within a specified period. They included vendor manufactured components with the goods manufactured by them towards computing the export obligation against two licenses. DGFT subsequently clarified that respondents cannot include the value of such vendor manufactured components.

The respondents wanted to account for some of the exports made against one licence to be accounted under the other to meet the shortfall arising out of exclusion of vendor manufactured components. In an earlier hearing, it was suggested by the Bench that the issue should be sorted out with the Licensing Authority as to whether such a shifting of export from one licence to another is permissible under the EXIM policy in force. Respondents approached the DGFT Authorities. The matter was considered by the EPCG Committee held on 3.6.2010 as reflected in the letter dated 21.6.2010 issued by the Foreign Trade Development Officer to the respondents.

In the Minutes of the EPCG Committee, it was noted that the export product is same in all the three licences. The export obligation period is also concurrent. The firm would be able to regularize the subject licences if the shipping bills contained in Annexure - II of the Agenda are allowed for adjustment from one licence to another.

The Committee also noted that there is no loss to the exchequer on this account. In view of this, the Committee decided to allow adjustment of exports from 1^st EPCG licence and 2^nd EPCG licence to 3^rd EPCG licence. The remaining requests for re-fixation of EO and issue of EODC are acceded to & would accordingly be disposed off on file.

Reasoning of Judgment:- In the light of the decision taken by the EPCG Committee which has been forwarded to the Zonal Joint DGFT for necessary action, the Tribunal felt it expedient that the earlier orders passed by the Authorities below should be set aside. Matter remanded to the Original Authority for fresh decision on the issue keeping in view the Minutes of the EPCG Committee and any further communication to be issued by the Zonal Joint DGFT based on such Minutes. Impugned orders set aside.

Decision:- Appeals disposed of.

Comments:- As there was no loss to the revenue in the instant case the Tribunal has remanded the matter to take other committees decision into consideration.

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PJ/Case Laws/2010-11/1018

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