2018 (8) TMI 965 - AT - Customs

Violation of import conditions - EPCG license - an allegation has been made that the appellant had diverted the machines imported under EPCG scheme and not installed the same in the address declared in the license - N/N. 22/2013 - Held that - Revenue has sought to disregard the rent agreement on the basis of what the land lord told the Revenue officials. However, no statements of the said land lord were recorded, nor the said land lord was confronted with the said rent agreement. In these circumstances, the charge that the appellant had not entered into the rent agreement for the said premises cannot be upheld. There is no merit in the Revenue s allegations that the explanation given by the importer is false or incorrect. The appellant has claimed that the machine was not sold or disposed off or transferred by him to anybody else and, thus, there is no violation of that condition of the notification. It has been argued that the different address for installation is a curable defect for which they have already made an application to DGFT and which has yet not been not decided. There is no violation on the part of the importer, on account of which the duty could have been demanded or machines could have been confiscated. The appellants application for change of address is pending with DGFT and any action could have only be taken if DGFT rejects the said application. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand of Customs duty, penalties, interest, denial of EPCG scheme, confiscation, and redemption fine.

Analysis:
The appellant, Vency Creation, imported embroidery machines and faced allegations of violating EPCG scheme conditions by not installing the machines at the declared premises. The appellant argued that despite entering into a rent agreement for the declared premises, the landlord refused access, leading to installation at an alternate location nearby. The appellant emphasized that the machines were not sold or transferred, asserting a technical violation due to the premises change. The Revenue's contention of a false rent agreement was challenged, highlighting the pending application for address amendment with DGFT.

The conditions of the EPCG License and notification required installation at the declared premises within six months, with provisions for address amendments. The appellant's explanation of the premises change due to landlord issues was deemed credible, with no evidence of violation or intent to evade conditions. The appellant's pending address change application with DGFT was considered a legitimate attempt to rectify the situation, emphasizing the absence of any substantive breach warranting duty demand or confiscation.

The Tribunal found no violation by the importer, concluding that the duty demand and confiscation were unwarranted. The pending address change application with DGFT indicated a proactive approach to rectify the situation, underscoring the lack of malintent or deliberate non-compliance. Consequently, the impugned order was set aside, and the appeal was allowed, emphasizing the importance of adherence to procedural requirements and the allowance for corrective measures before punitive actions are taken.