2008 (8) TMI 258 - AT - Customs

Imports of car for the service sector - Allegation that assessee-importer have not shown separate income in foreign exchange attributable to three Mercedez Benz cars imported - Customs Notfn. or the Export Import Policy do not prescribe the nature of record to be maintained by the importer- service provided has been given the freedom to use the imported cars in whatever way he considers best to earn the incremental foreign exchange. The cars have not been sold or in any way alienated to any other person by the importer. Merely because the cars are registered in Delhi and are registered for personal use is not sufficient evidence held that there is no violation of the requirement of the EPCG scheme

Summary

Issues:
Department appealing against Commissioner's order on EPCG license conditions and duty demand for imported cars in a hotel industry.

Analysis:
The case involves an appeal by the Department against the Commissioner's order regarding the EPCG license conditions and duty demand for three Mercedez Benz cars imported by a hotel in Kanpur. The Department alleged that the hotel did not show separate income in foreign exchange attributable to the imported cars. However, after examining the reply and hearing the party, the Commissioner found no violation of the EPCG license conditions. The Department contended that the cars were not registered for commercial use under the Motor Vehicles Act and no separate income was maintained for their use.

The Advocate for the respondent argued that the hotel, a five-star facility, used the cars as an added attraction for affluent guests and for services like pick up and drop for foreign guests. They emphasized that the hotel met the export obligation by earning the required foreign exchange and had informed the Customs Department accordingly. The Advocate highlighted that there was no requirement for the vehicles to be registered as tourist vehicles until a recent directive by the DGFT.

Upon careful consideration of both sides' submissions, the Tribunal found no violation of the EXIM Policy, EPCG license conditions, or the exemption notification governing car imports for the service sector. The Commissioner's findings indicated that the imported cars were used in line with the intended purpose, and there was no evidence of misuse or violation. The Tribunal noted that the Department failed to provide proof of any misuse or sale of the cars. Ultimately, the Tribunal rejected the Department's appeal, upholding the Commissioner's decision.

In conclusion, the Tribunal's decision favored the respondent, affirming that there was no violation of the EPCG scheme or Customs notification in the import and use of the cars by the hotel industry. The judgment emphasized the importance of meeting export obligations and using imported goods for incremental foreign exchange earnings, while highlighting the lack of specific requirements for maintaining detailed records of income from imported capital goods in the relevant policies.