2008 (4) TMI 192 - AT - Customs

Capital goods imported against EPCG licence taking benefit of Notification 160/92 demand raised on grounds of failure to prove goods exported were made of imported capital goods & export obligation fulfilled is only 98% sufficient explanation given by importer to substantiate their claim that the exported goods were made of imported capital goods further, certificate issued by DGFT regarding fulfillment of export obligation cannot be disputed by custom authority demand is not justified

Issues:
1. Compliance with export obligations under EPCG scheme.
2. Verification of goods exported being manufactured from imported capital goods.
3. Interpretation of Notification No. 160/92-Cus. and related Board Circulars.
4. Dispute over acceptance of certificate from licensing authority regarding export obligations.

Issue 1: Compliance with export obligations under EPCG scheme:
The case involved an appeal by the revenue regarding the failure of an importer to fulfill export obligations after importing capital goods under an EPCG license. The importer had cleared the goods at a concessional rate of duty under Notification No. 160/92-Cus. Investigations revealed non-compliance with the export obligations stipulated in the license. The Commissioner of Customs adjudicated the show cause notice in favor of the importer, stating that the export obligation had been met. The revenue challenged this decision in the appeal.

Issue 2: Verification of goods exported being manufactured from imported capital goods:
The revenue contended that the importer failed to provide evidence correlating the imported capital goods with the exported products. The revenue argued that the certificate submitted by the importer should not have been accepted without corroborative evidence. The importer maintained that the goods exported were indeed manufactured using the imported capital goods under the EPCG scheme. The Tribunal noted that the export obligations were fulfilled and emphasized that the burden of proof lay with the customs to challenge the importer's claim, which they failed to do.

Issue 3: Interpretation of Notification No. 160/92-Cus. and related Board Circulars:
The advocate for the importer argued that the conditions regarding proof of export obligations satisfaction were introduced in Notification No. 145/95 and could not be applied retroactively to Notification No. 160/92-Cus. The advocate cited previous orders where certificates issued by the licensing authority were deemed final and not subject to challenge by customs. The Tribunal analyzed the relevant Board Circulars and held that the requirement was for a declaration from the exporter confirming manufacturing of exported goods from imported capital goods, without necessitating further verification.

Issue 4: Dispute over acceptance of certificate from licensing authority regarding export obligations:
The crux of the appeal revolved around the acceptance of the certificate issued by the licensing authority confirming the fulfillment of export obligations. The revenue argued that the customs should have verified the exporter's claim with additional evidence. However, the Tribunal upheld the validity of the certificate, emphasizing that if customs had doubts, they should have raised the issue with DGFT authorities for clarification. The Tribunal cited previous cases and Circulars to support the view that the certificate issued by the licensing authority was conclusive and could not be challenged without substantial evidence to the contrary.

In conclusion, the Tribunal dismissed the revenue's appeal, affirming that the exported goods were manufactured from the imported capital goods under the EPCG scheme, and the export obligations were duly fulfilled as certified by the licensing authority. The judgment highlighted the importance of evidence and burden of proof in challenging such certifications, while also underscoring the finality of certificates issued by the licensing authority in such matters.

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