2014 (1) TMI 1480 - AT - Customs

Demand of duty - Confiscation of cars - Registration of vehicle not obtained - whether the seizure of the goods as on the date of seizure is legally valid and the adjudication proceedings, consequent thereon, is sustainable - Held that - in spite of the specific condition in the license that the car should be registered as a tourist taxi it was not so registered for more than 6 months. The circumstances under which the car was seized also indicates that the car was being used for purposes other than that for which it was stated to be imported - car should have been put to use for activities which earn foreign exchange though the argument that the entire export obligation should be discharged by earning from fare charges of the cars was not accepted by the Court - bank guarantee is not sufficient form of pre-deposit - Conditional stay granted.

Summary

Issues:
Import of Mercedes Benz Car under EPCG Scheme; Non-compliance with post-import conditions; Confiscation of car; Demand of duty; Imposition of penalty.

Analysis:
The judgment involves two appeals arising from the same impugned order regarding the import of a Mercedes Benz Car under the EPCG Scheme. The first applicant operates a resort in Kerala, and the second applicant is the Managing Director of the first applicant. The car was imported using an EPCG license but was not registered as a tourist vehicle as required by the license. Customs officers conducted investigations, seized the vehicle, and issued a show-cause notice under Section 111(o) of the Customs Act for non-compliance with post-import conditions. The matter was adjudicated, appealed to the Tribunal, remanded for de novo consideration, and adjudicated again by the Commissioner, resulting in the confiscation of the car, redemption fine, duty demand, and penalty imposition.

The main objection raised in the show-cause notice was the non-registration of the car as a tourist vehicle, failure to render services to fulfill export obligations, and non-maintenance of required records. The applicants argued that the DGFT relaxed the registration condition for past cases and fulfilled the export obligation after registering the car as a tourist taxi. They cited relevant policy circulars and legal precedents to support their case.

The Revenue argued that the issues had been decided in previous cases and that non-compliance within the prescribed time limit justified the proceedings initiated by customs authorities. The Tribunal considered the legality of the seizure at the time and the sustainability of the adjudication proceedings. It noted that the car was not registered as a tourist taxi for over six months, indicating non-compliance with the license conditions. The Tribunal emphasized the importance of using the car for activities earning foreign exchange and directed the applicant to make a pre-deposit of Rs. 14,00,000 within six weeks.

The Tribunal also addressed the applicant's request to reduce the bank guarantee amount in light of the pre-deposit requirement. The judgment highlighted the significance of complying with specific license conditions, using the imported vehicle for intended purposes, and fulfilling export obligations to avoid penalties and confiscation. The decision underscored the need for strict adherence to post-import conditions under the EPCG Scheme and emphasized the importance of foreign exchange earnings in discharging export obligations.