2018 (9) TMI 1955 - AT - Customs

Non-fulfilment of export obligation - recovery of differential duty with interest - benefit of N/N. 97/2004-Cus., dated 17th September, 2004 - case of appellant is that the customs authorities are not permitted to go beyond the certification issued in accordance with the powers entrusted to another agency of the governmentHELD THAT - The export obligation discharge certificate is designed to assign a finality to the fulfilment of the conditions of export obligation prescribed in the Export Promotion Capital Goods scheme. Once the obligation has been complied with, the liability to duty cannot be revisited unless there is some discrepancy which comes to light through an investigation and is reflected in revision of, or reference for such revision in, the certificate by the competent authority. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Recovery of differential duty for not fulfilling export obligation as per EPCG scheme.

Analysis:
The appeal was filed against an Order-in-Appeal upholding the recovery of differential duty for not meeting the export obligation under the EPCG scheme. The appellant had procured machines under the scheme, executed necessary bonds and guarantees, and obtained an 'export obligation discharge certificate' upon fulfilling the obligation. Customs initiated proceedings for duty recovery due to the shortfall in export obligation.

The contention of the appellant's consultant was that customs authorities cannot disregard the certificate issued by the Director General of Foreign Trade, and any discrepancies should be addressed by informing the licensing authority. It was argued that it was not legally correct for another authority to ignore a valid certificate.

On the other hand, the Authorised Representative argued that the original authority had the jurisdiction to recover duty based on its own calculation of the shortfall, despite the existence of the 'export obligation discharge certificate'. However, the Tribunal found this argument unacceptable.

The Tribunal held that the 'export obligation discharge certificate' signifies the completion of export obligation conditions under the EPCG scheme, providing finality to the fulfillment. Once the obligation is met, the duty liability cannot be revisited unless discrepancies are discovered through investigation and reflected in a revised certificate by the competent authority.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal on the basis that duty liability cannot be revisited once the export obligation is fulfilled, unless discrepancies are officially revised by the competent authority. The judgment was pronounced on 10-9-2018.