2010 (8) TMI 265 - AT - Customs

EPCG Scheme Shifting of export from one licence to another whether permissible under Exim Policy - matter remanded to the original authority for fresh orders - 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

Summary

Issues:
1. Interpretation of export obligation under EPGG licenses.
2. Permissibility of shifting exports between licenses to meet obligations.
3. Authority to decide on adjustment of exports between licenses.
4. Legality of withdrawal of 'No objection Certificate' by Custom Authorities.

Analysis:
1. The case involves the respondents obtaining two EPGG licenses for duty-free import of capital goods against export obligations. The Department alleged that the respondents included vendor-manufactured components in fulfilling export obligations, which was later clarified as impermissible by the DGFT. Subsequently, the respondents sought to shift exports between licenses to address the shortfall due to exclusion of vendor components.

2. The matter was referred to the EPCG Committee, which considered the issue. The Committee acknowledged that the export products were the same across licenses, and the export obligation periods were concurrent. It was noted that there was no loss to the exchequer by allowing adjustment of exports between licenses. Consequently, the Committee decided to permit the adjustment of exports from specific licenses to another to regularize the licenses.

3. In light of the EPCG Committee's decision, the Tribunal set aside the earlier orders and remanded the matter to the original authority for a fresh decision. The Tribunal directed the original authority to consider the Committee's minutes and any subsequent communication from the Zonal Joint DGFT based on those minutes. The respondents were to be given a fair hearing before a fresh order was passed.

4. Additionally, the legality of the withdrawal of the 'No objection Certificate' by Custom Authorities was questioned. The withdrawal was initially challenged, leading to the matter being pending before the CESTAT. The Tribunal's decision did not directly address this issue but focused on remanding the case for fresh adjudication based on the EPCG Committee's decision.

In conclusion, the judgment primarily revolved around the interpretation of export obligations under EPGG licenses, the permissibility of shifting exports between licenses, and the authority to decide on such adjustments. The Tribunal emphasized a fair hearing for the respondents and remanded the case for a fresh decision in line with the EPCG Committee's recommendations.