2020 (2) TMI 1358 - AT - Customs

EPCG Scheme - concessional rate of duty - vehicle has not been registered as tourist vehicle - recovery of duty forgone along with interest and penalty - HELD THAT - It is brought out from the facts that the appellant has obtained registration under tourist category after the proceedings have been initiated - D.G.F.T. vide Circular dated 7-5-2008 has clarified that an importer/assessee could get the vehicles registered as tourist vehicle on or before 31-8-2008 and also if the EODC has not been issued within 30-6-2008. In the present case, the appellants have converted the registration to tourist vehicle much before issuance of EODC. The second allegation is that the appellants have not earned foreign exchange exclusively by the use of the imported vehicle - HELD THAT - In the case of Commissioner of Customs v. Hotel Excelsior Ltd. - 2016 (336) E.L.T. 595 (Del.), the Hon ble High Court of Delhi held that as long as foreign exchange is earned by the hotel and the imported cars are used for hotel purpose, there would be no violation of any statutory requirement and it is not necessary that the foreign exchange has to be exclusively earned by using the vehicle. The E.P.C.G. license does not envisage that the amount collected by use of the imported car only has to be accounted towards fulfilment of export obligation. In the present case, the appellant having been issued EODC on 12-6-2018 by the Jt. D.G.F.T., Trivandrum, the department cannot proceed to recover the duty forgone at the time of import, alleging non-fulfilment of conditions of EPCG license - Appeal allowed - decided in favor of appellant.

Summary

Issues: Violation of conditions in E.P.C.G. license

Issue 1: Vehicle registration as a tourist vehicle
The appellant imported a car under concessional duty using an EPCG license. The show cause notice alleged violations of conditions, including non-registration as a tourist vehicle. The appellant argued that the license did not require initial registration as a tourist vehicle, and the vehicle was later registered as such. Referring to a 2008 circular, the appellant stated compliance before the EODC issuance. Citing relevant case laws, the appellant contended that compliance after EODC issuance negates violation claims.

Issue 2: Foreign exchange earnings
The second allegation was the non-exclusive earning of foreign exchange through the imported vehicle. Citing case law, it was argued that as long as the hotel earned foreign exchange and used the cars for hotel purposes, no violation occurred. The Tribunal analyzed a similar case where personal use of imported cars did not breach conditions if not violating the import scheme. The appellant was issued an EODC before the proceedings, indicating compliance. The Tribunal concluded that the demand was unsustainable, setting aside the impugned order and allowing the appeals with any consequential relief.

This judgment addressed the alleged violations of conditions in the E.P.C.G. license, focusing on vehicle registration as a tourist vehicle and foreign exchange earnings. The appellant successfully argued compliance with the conditions, supported by case laws and circulars. The Tribunal emphasized the importance of compliance and proper authority in determining fulfillment of obligations under the license, ultimately ruling in favor of the appellant and setting aside the demand.