2009 (5) TMI 783 - AT - Customs

Summary

Issues:
1. Violation of law by the appellant in exporting goods from a different factory than the one where capital goods were installed under EPCG Licence.
2. Interpretation of the requirement of exclusive use of capital goods for the grant of concession under the Exim Policy.
3. Adjudication of the case by the Tribunal based on the observations of the Commissioner (Appeals) and relevant legal precedents.

Detailed Analysis:
Issue 1:
The appellant imported capital goods under an EPCG Licence but exported goods from a different factory than the one where the capital goods were installed, violating the terms of the concession. The Revenue argued that this action defeated the purpose of the notification and the Exim Policy, leading to the recovery of the concession availed by the appellant. The appellant sought clarification from DGFT, which emphasized that the goods manufactured should have been from the imported machinery, and exclusive use of the capital goods was necessary for the concession. As the appellant failed to prove that the export obligation was fulfilled using the imported capital goods, Revenue contended that the appellant should not retain the earlier concession.

Issue 2:
The Tribunal examined the clarification provided by DGFT and the Ministry of Law, emphasizing the necessity of exclusive use of capital goods for the grant of concession under the Exim Policy. It was noted that the goods manufactured in Gurgaon did not contribute to the discharge of the export obligation, as the capital goods installed in Ludhiana factory were not utilized for this purpose. The Tribunal agreed with Revenue's stance that the appellant had failed to establish a nexus between the imported capital goods and the fulfillment of the export obligation, thereby justifying the dismissal of the appellant's appeal.

Issue 3:
The Tribunal upheld the order of the Commissioner (Appeals), who had observed that the goods manufactured in Gurgaon were only used to fulfill the export obligation, without the involvement of the capital goods installed in Ludhiana factory. Relying on the decision of the Apex Court in a relevant case, the Tribunal concluded that the appellant had indeed defeated the purpose of the concession under the law. Consequently, the Tribunal dismissed the appellant's appeal based on the findings and legal precedents presented during the proceedings.