2014 (7) TMI 842 - AT - Customs

Import of car subject to actual user condition - revenue contended that car imported under EPCG scheme was registered as private vehicle in non-transport/non commercial category - allegation that cars were not used for tour and travels to earn foreign exchange - appellant contended that transport authority did not register the car as taxi - Held that - When the car was not used for the purpose it was meant, there was no foreign exchange earning made by the appellant for which it failed to discharge export obligation. Investigation brought out entire truth of the import and gross violation of the import condition in para 12 of the show cause notice. No use of the car for commercial purpose came to record. - Appeal is dismissed accordingly on first principle noticing abuse of the EPCG licence. - Decided against the assessee.

Summary

Issues Involved:

1. Violation of EPCG Licence conditions.
2. Non-fulfillment of export obligations.
3. Misuse of imported vehicle for personal purposes.
4. Incorrect declarations and fraudulent procurement of EPCG licence.
5. Non-compliance with provisions of Foreign Trade Policy and Customs Act.

Issue-wise Detailed Analysis:

1. Violation of EPCG Licence Conditions:

M/s. Nijhawan Travels Services Pvt. Ltd. imported a Mercedes SL500 under EPCG licence No. 0530137584, which mandated several conditions, including the actual user condition and installation at a specified location. The investigation revealed that the car was not used for tour and travel services to earn foreign exchange but was instead used privately by the Managing Director, Sham Nijhawan. The car was found parked at his residence, and statements from the driver and security guard confirmed its private use. This violated the actual user condition and other stipulated conditions of the EPCG licence.

2. Non-fulfillment of Export Obligations:

The EPCG licence required the appellant to fulfill export obligations by using the imported car for services that earn foreign exchange. However, the investigation found no evidence of the car being used for commercial purposes or earning foreign exchange. The car was registered as a private vehicle, and no records were maintained to prove its use for commercial purposes. The Managing Director admitted that the car was not used to earn foreign exchange, and no export obligation certificate was submitted to the DGFT or Customs department.

3. Misuse of Imported Vehicle for Personal Purposes:

The investigation concluded that the imported Mercedes SL500 was used exclusively for the personal and private use of the Managing Director, Sham Nijhawan. The car was registered as a private vehicle, and an affidavit submitted to the Transport Authority stated that it would not be used for taxi purposes. This misuse of the vehicle for personal purposes violated the EPCG scheme's conditions, which required the car to be used for commercial purposes to earn foreign exchange.

4. Incorrect Declarations and Fraudulent Procurement of EPCG Licence:

The appellant was found to have made false and incorrect declarations to the DGFT authorities to obtain the EPCG licence fraudulently. The provisions of Section 11 of the FTDR Act, 1992, and Rule 14(1) of the FTRR, 1993, were violated, and the appellant intended to evade the payment of customs duty on the imported car. The investigation revealed that the car was not used for the declared purpose, and the appellant did not fulfill the conditions of the EPCG licence.

5. Non-compliance with Provisions of Foreign Trade Policy and Customs Act:

The appellant violated various provisions of the Foreign Trade Policy and Customs Act, including not maintaining records of the car's use, not submitting the installation certificate, and not using the car to earn freely convertible foreign currency. The car was liable for confiscation under Section 111(d) and 111(o) of the Customs Act, 1962, and penalties under Sections 112(a) and 114A of the Customs Act, 1962. The show cause notice proposed confiscation of the car, recovery of differential customs duty, and imposition of penalties on both the company and its Managing Director.

Conclusion:

The Tribunal upheld the findings of the investigation, concluding that the appellant had grossly violated the conditions of the EPCG licence and the provisions of the Foreign Trade Policy and Customs Act. The appeal was dismissed, and the adjudication was sustained on the grounds of abuse of the EPCG licence and failure to fulfill export obligations. The cited decisions were not considered relevant due to differing facts.