2008 (12) TMI 137 - AT - Customs

Cars imported under EPCG license SCN issued proposing confiscation of cars on ground of violation of conditions of Notification no. 44/2000 as well as EPCG licence - According to the appellant, not only the DGFT had not accepted the view of the Customs Department but they have also redeemed the EPCG licence after certifying that they have fulfilled the export obligation as prescribed - understanding of the DGFT authorities cannot be brushed aside without valid reasons revenue has not shown that the cars have been used for any purpose other than those stipulated in the EPCG licence confiscation not justified

Summary

Issues Involved:
- Interpretation of conditions of EPCG licence and related notifications
- Compliance with export obligation under EPCG Scheme
- Confiscation of imported cars and imposition of penalties

Interpretation of conditions of EPCG licence and related notifications:
The case involved an appellant-company that imported two BMW cars under an EPCG licence issued for a travel agency. The company claimed to have fulfilled the export obligation and received acceptance from DGFT authorities. However, a show cause notice was issued by DRI for confiscation of the cars and recovery of duty, alleging violations of notification and EPCG licence conditions. The Commissioner subsequently confiscated the cars, imposed fines and penalties. The appellant argued that the cars were used for intended purposes, generating foreign exchange earnings, and that DGFT's acceptance of export obligation fulfillment should be considered. The Tribunal examined the exemption notification governing EPCG imports, emphasizing the need to fulfill export obligations as per the EXIM policy. It noted the disagreement between Customs and DGFT authorities regarding compliance and highlighted the broad scope of "tour and travel" services under the EPCG licence.

Compliance with export obligation under EPCG Scheme:
The Tribunal considered the appellant's submissions regarding the use of imported cars for foreign exchange earnings and the inclusion of associated services in fulfilling export obligations. It referenced relevant case laws and a DGFT circular supporting the appellant's arguments. The Tribunal acknowledged the Customs authorities' role in verifying compliance independently but stressed the importance of DGFT's interpretation of EXIM policy provisions. It noted the lack of evidence showing the cars were used for purposes other than travel and tour, questioning the strict interpretation of export obligation computation from the date of import. Ultimately, the Tribunal found insufficient justification to uphold the Commissioner's order, setting it aside and allowing the appeals.

Confiscation of imported cars and imposition of penalties:
The Commissioner had confiscated the cars, imposed fines, and penalties on the appellant and its Managing Director. The Tribunal, after evaluating the arguments and legal provisions, concluded that the Commissioner's decision was not justified. As a result, the Tribunal set aside the order and provided consequential relief to the appellants, indicating a favorable outcome for the appellant-company in the case.