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2020 (6) TMI 424 - AT - CustomsEPCG Scheme - import of the Mercedes car - allegation for use for personal purpose of director - concessional rate of Customs Duty - N/N. 97/2004CUS - export of service under Tour and Travels services as per prevailing the import export policy - Circular No. RE-08/20032004 dated 7 May 2008 - HELD THAT - since the imported capital good being a car which is a movable capital equipment and there is no allegation in the show cause notice or in the findings given in the order-in-original that the capital goods imported under the EPCG licence have been found in possession of the importing firm and its Director and was found parked at the residence of the Director - there are no violation of the condition of the EPCG licence has been done on this count as the vehicle found in the possession of the importing firm and no evidence have been adduced by the Department to sustain their claim that it was not used for the purpose for which it has been allowed to be imported by the EPCG licence on concessional rate of customs duty. The export obligation fulfillment documents have been accepted by the Additional Director General Foreign Trade and at the same time, it is also found that imported capital goods namely car in this case under EPCG licence was imported validly declaring all the relevant facts and subsequently also there has been no violation of any of the conditions of EPCG/Customs Notification, the impugned order-in-original is devoid of any merits and therefore the same is set aside. Appeal allowed.
Issues Involved:
1. Validity of the import of Mercedes SL 500 car under the EPCG scheme. 2. Alleged violations of the conditions of the EPCG license. 3. Confiscation of the imported car and imposition of fines and penalties. 4. Fulfillment of export obligations under the EPCG scheme. Issue-wise Detailed Analysis: 1. Validity of the import of Mercedes SL 500 car under the EPCG scheme: The appellants imported a Mercedes SL 500 car under the EPCG scheme, claiming a concessional rate of customs duty of 5% as per Notification No. 97/2004CUS dated 17 September 2004. The import was supported by an EPCG license issued on 10 December 2004. The appellants argued that the import was valid as they were in the tour and travel service business, earning substantial foreign exchange, which justified the issuance of the EPCG license for importing capital goods, including the car. 2. Alleged violations of the conditions of the EPCG license: The department alleged several violations, including the car not being installed at the specified address, not being used for earning foreign currency, being insured as a personal vehicle, and being used by the Director for personal purposes. The show cause notice dated 2 February 2009 listed these allegations, suggesting that the car was imported and cleared by fraudulently availing duty exemption. 3. Confiscation of the imported car and imposition of fines and penalties: The adjudicating authority confirmed the recovery of ?51,86,378/- as differential customs duty along with interest, imposed a mandatory penalty equivalent to the duty evaded, confiscated the car with an option to redeem it on payment of a fine of ?10,00,000/-, and imposed a penalty of ?5,00,000/- on the Managing Director under Section 112 (b) of the Customs Act, 1962. 4. Fulfillment of export obligations under the EPCG scheme: The appellants contended that the car was used for receiving VIP clients exclusively for business purposes and that the requirement to register the car as a tourist vehicle was not mandatory at the time of import. They argued that the car's usage did not violate EPCG conditions as the primary requirement was the earning of foreign exchange, which was fulfilled. The Additional Director General Foreign Trade had issued an Export Obligation Discharge Certificate (EODC) on 30 January 2017, certifying the fulfillment of export obligations. Judgment: The Tribunal found that the appellants had validly imported the car under the EPCG scheme and that there was no violation of the EPCG license conditions. The Tribunal noted that the car being parked at the Director's residence did not constitute a violation as it was still in the possession of the importing firm. The Tribunal emphasized that the primary condition of earning foreign exchange was met, as evidenced by the EODC issued by the Additional Director General Foreign Trade. Consequently, the Tribunal set aside the order-in-original, ruling that the confiscation, fines, and penalties were unwarranted. The appeals were allowed, and the order was pronounced in open court on 10/06/2020.
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