2004 (10) TMI 425 - AT - Customs

Summary

Issues:
1. Interpretation of EPCG License provisions and EXIM Policy regarding import of machinery.
2. Applicability of age restriction on machinery imports under EPCG Scheme.
3. Conflict between general import provisions and EPCG Scheme regulations.
4. Authority of Customs officials in enforcing restrictions based on license conditions.

Analysis:

1. The judgment revolves around the interpretation of provisions under the Export Promotion Capital Goods (EPCG) Scheme and the EXIM Policy concerning the import of machinery by a manufacturer of Jem Jelly who also exports goods. The appellant obtained an EPCG License for the import of a Research Sputler Vacuum Tool with Spear Parts at a reduced customs duty rate of 5%.

2. The primary issue was the denial of the lower customs duty rate and confiscation of the imported machine due to it being more than 10 years old, a restriction not explicitly mentioned in the EPCG Chapter of the EXIM Policy during the relevant period. The appellant argued that the age restriction applied to imports under Open General License, not EPCG imports, and that the authorities could not impose such a requirement retroactively.

3. The Commissioner overruled the appellant's contention, citing that the license would be operative as per the provisions of the EXIM Policy and Hand Book of Procedures, implying that all restrictions and conditions would apply to the license, not limited to Chapter 5 as claimed by the appellant. However, the Tribunal found merit in the appellant's argument, highlighting the distinction between general import provisions and EPCG Scheme regulations.

4. The Tribunal emphasized that during the relevant period, Chapter 5 of the EXIM Policy, which governed imports under the EPCG Scheme, did not include any condition regarding the age of imported machinery. The focus was on export obligations, and the age restriction was only applicable to Open General License imports. The Customs authorities were deemed unjustified in disputing the import based on an incorrect understanding of the EXIM Policy, especially since the age condition for EPCG Scheme imports was introduced only after the appellant's import.

5. Consequently, the Tribunal set aside the impugned order, ruling in favor of the appellant and granting consequential relief. The judgment clarified the distinction between general import provisions and EPCG Scheme regulations, emphasizing that the age restriction on machinery imports did not apply to EPCG Scheme imports during the relevant period, thereby allowing the appellant's appeal.