2018 (4) TMI 782 - AT - Customs

N/N. 111-95/Cus dated 5th June 1995 - Export Promotion Capital Goods (EPCG) scheme - terms of remand - Held that - The terms of the remand are very clear; the only issue left for the adjudicating authority was to determine fulfilment of the export obligation within the statutory period. The fulfilment of the revised export obligation within the extended period is not in question. The adjudicating authority should have limited its findings only to that and should not have traveled beyond the terms of the remand. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Compliance with export obligation under the EPCG scheme.
2. Interpretation of conditions in notification no. 111/95-Cus dated 5th June 1995.
3. Authority of customs officials to review certification of export obligation fulfillment.
4. Adjudication based on remand terms.

Compliance with export obligation under the EPCG scheme:
The appellant had an import license under the EPCG scheme with an export obligation to manufacture specific goods. The original authority held the capital goods liable for confiscation due to alleged failure in fulfilling the export obligation. However, the Tribunal had remanded the matter previously for consideration only after the extended period for export obligation fulfillment. The appellant contended that the export obligation had been met as per revised terms of the import license. The Tribunal observed that the remand was limited to ascertaining export obligation fulfillment, and since the revised obligation had been substantially met, the impugned order was set aside, and the appeal was allowed.

Interpretation of conditions in notification no. 111/95-Cus dated 5th June 1995:
The adjudicating authority based its decision on the non-fulfillment of a condition in the notification regarding a minimum import value, which led to discarding the certification of export obligation fulfillment. The Tribunal noted that the authority's reliance on a previous decision was not valid as it had been remanded for a reference on a substantial point of law. Various decisions rejected customs authorities' competence to review export obligation certificates issued by the licensing authority. The Tribunal concluded that the appellant did not violate the notification's conditions, as the import value restriction made it impossible to meet the minimum import value condition.

Authority of customs officials to review certification of export obligation fulfillment:
The Learned Counsel argued that customs authorities cannot review the certification of export obligation fulfillment, citing previous Tribunal decisions and High Court rulings. The Tribunal agreed with this stance, emphasizing that the competence of customs authorities to decide on export obligation certificates had been consistently rejected and endorsed by the High Court of Madras.

Adjudication based on remand terms:
The terms of the remand were clear, limiting the adjudicating authority to determining export obligation fulfillment within the statutory period. As the revised export obligation had been met within the extended period, the impugned order was deemed unsustainable for confiscating goods, ordering duty recovery, and imposing penalties. Consequently, the impugned order was set aside, and the appeal was allowed based on the deviation from the Tribunal's order and the conditions of the notification.

This comprehensive analysis of the legal judgment highlights the key issues addressed by the Appellate Tribunal CESTAT HYDERABAD in the case, covering compliance with export obligations, interpretation of notification conditions, authority of customs officials, and adjudication based on remand terms.