2019 (12) TMI 898 - HC - Customs

Detention of goods - EPCG Scheme - benefit of concessional rate of duty - recovery of the differential customs duty - HELD THAT - Although it is a fact that the petitioner could not install the items of capital machinery imported by them under the EPCG scheme within the specified time after their import, it is also a fact that their case for waiver of the procedural requirements under the EPCG scheme is pending consideration before the 5th respondent, pursuant to a permission stated to have been granted to them by the 3rd respondent through a communication dated 28.12.2018 - The application for review of the earlier decision of the EPCG Committee, rejecting their request for waiver of the procedural conditions under the EPCG scheme, appears to be based on the general power of review that is conferred on the DGFT under paragraph 9.13 of the Handbook of Procedures to the Foreign Trade Policy, 2015-20. If a decision favourable to the petitioner is taken by the said committee in the review petition, then it would obviate the necessity for pursuing the demand for differential customs duty at the instance of the authorities under the Customs Act - therefore, it would be prudent for this Court to direct the 5th respondent Committee, headed by the 3rd respondent, to consider and pass orders on Ext.P34 application within an outer time limit of six months from the date receipt of a copy of this judgment, after hearing the petitioner in the matter. The impugned detention notices cannot survive - Petition disposed off.

Summary

Issues:
Challenge against detention orders under Section 142 of the Customs Act for not fulfilling installation conditions of imported capital goods under EPCG scheme.

Analysis:
The petitioner imported capital goods under EPCG licenses for a Pollution Control Project but failed to install them within the specified period, leading to detention notices for recovery of differential customs duty. Despite seeking extensions, the petitioner faced rejection from Customs authorities and subsequent appeals. The CESTAT partially allowed an extension till December 2015, with the possibility of further extensions. The petitioner later requested more time, leading to detention notices in 2017. The High Court granted an interim stay and directed involvement of authorities under the Foreign Trade Act for further extensions.

The Customs authorities argued that given the petitioner's repeated failure to install the machinery, delaying recovery of customs duty would be futile. The Court considered the pending review application for waiver of EPCG conditions before the EPCG Committee and directed them to decide within six months. The Court extended the installation deadline to 31.03.2020, subject to the Committee's decision, and quashed the detention notices, allowing Customs to issue fresh notices if necessary post the Committee's decision.

In conclusion, the High Court disposed of the writ petition by directing the EPCG Committee to decide on the waiver application within six months, extending the installation deadline, and quashing the detention notices, providing Customs the option to issue fresh notices post the Committee's decision.