2017 (12) TMI 980 - AT - Customs

Benefit of N/N. 64/2008-Cus dated 9.5.2008 - EPCG Scheme - violation of import condition - Vehicles - Held that - While grievance of Revenue is that the car was not found in the premises of the hotel and no foreign tourists were found therein, but that was used for the personal purpose of the appellant hotel, there cannot be claim of notification benefit. There was no enquiry conducted to show that car was not used for such purpose, for which the plea of Revenue should not sustain - Revenue having failed to prove that the vehicle was not used for the purpose of foreign tourists and not also proved that there was no foreign exchange earned, the appellant should not suffer. It had maintained logbook and car was used for foreign tourists and foreign exchange was earned. Mere use of the car by Directors in exigency does not debar the appellant from the notification benefit. A plethora of documents submitted by the appellant could not rule out use of the vehicle for the foreign tourism and stray use of the vehicle by Director shall not dis-entitle the appellant when appropriate foreign exchange earning remain undoubted and uncontroverted by the Revenue. Reliance placed in the case of Hotel Excelsior Ltd., Jagdish Rai Sood, Director, Raman Kumar Sood, Director, Ajay Kumar Sood, Director, Satish Kumar Sood, Erstwhile Director Versus Commissioner of Customs (I And G), New Delhi And Vica-Versa 2015 (12) TMI 1045 - CESTAT NEW DELHI , where it was held that proceedings initiated against HEL and its Directors for violation of condition of notification or the EPCG licence are not sustainable as the same are pre-mature as HEL is still in possession of the cars and registered the same as tourist vehicle. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Denial of benefit under Notification No. 64/2008-Cus dated 9.5.2008.
2. Alleged violation of the EPCG scheme conditions.
3. Confiscation of the car and imposition of penalty.
4. Use of imported vehicles for personal purposes by Directors.
5. Maintenance of log books and registration requirements.
6. Foreign exchange earnings and actual use of vehicles.

Issue-wise Detailed Analysis:

1. Denial of Benefit under Notification No. 64/2008-Cus:
The adjudicating authority denied the benefit of Notification No. 64/2008-Cus, claiming that the appellant violated the conditions of the EPCG scheme by importing a car without payment of duty and using it for personal purposes. The authority directed the confiscation of the car and imposed penalties.

2. Alleged Violation of EPCG Scheme Conditions:
The appellant was accused of using imported vehicles for personal purposes rather than for ferrying foreign tourists, as required by the EPCG scheme. The adjudicating authority found no substantial evidence to support the claim of personal use by the Director. The appellant argued that the EPCG license did not mandate the maintenance of a log book, and the vehicles were used to fulfill the export obligation and earn foreign exchange, as evidenced by the registration certificates and invoices.

3. Confiscation of the Car and Imposition of Penalty:
The adjudicating authority ordered the confiscation of the car and imposed penalties based on the alleged violation of the EPCG scheme. However, the appellant contested this decision, citing the lack of evidence for personal use and the fulfillment of all conditions stipulated by the EPCG license and the Customs exemption notification.

4. Use of Imported Vehicles for Personal Purposes by Directors:
The Revenue alleged that the vehicles were used by the Directors for personal purposes, not for ferrying foreign tourists. The appellant countered that occasional use by Directors in unavoidable circumstances did not constitute a violation of the EPCG scheme or the conditions of the notification. The Tribunal found no credible evidence to prove that the vehicles were used exclusively for personal purposes.

5. Maintenance of Log Books and Registration Requirements:
The appellant argued that the EPCG license and the Customs exemption notification did not specify the need for maintaining a log book in a particular form. The vehicles were registered for use in transporting foreign tourists, and the appellant provided documentation to support this claim. The Tribunal noted that the absence of a log book did not necessarily imply a violation of the scheme's conditions.

6. Foreign Exchange Earnings and Actual Use of Vehicles:
The appellant maintained proper accounts to demonstrate that foreign exchange was earned through hotel activities, including transportation services for foreign tourists. The Tribunal found that the appellant fulfilled the conditions of the EPCG scheme and the Customs notification, as the vehicles were used for the intended purpose, and foreign exchange earnings were not disputed by the Revenue.

Conclusion:
The Tribunal concluded that the appellant did not violate the conditions of the EPCG scheme or the Customs notification. The vehicles were used for providing hotel services to foreign tourists, and occasional use by Directors did not disqualify the appellant from the benefits of the notification. The appeal was allowed, and the order of confiscation and penalties was set aside, following the precedent set by the Hon'ble High Court of Delhi in similar cases.

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