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2023 (6) TMI 714 - HC - CustomsViolation of EPCG Scheme - machines given on hire - installation certificate is issued without verification and appellant has diverted some machines imported to other mines - HELD THAT - In the case of ADITYA BIRLA NUVO LTD. 2021 (2) TMI 93 - KARNATAKA HIGH COURT it was held that, Once the issue is examined by the Joint Director of Foreign Trade, it not open to the Customs Authorities to take a different stand. With regard to the first authority in COMMISSIONER OF CUSTOMS, CALCUTTA VERSUS INDIAN RAYON INDUSTRIES LTD. 2008 (7) TMI 401 - SUPREME COURT Case, it was argued by Shri. Shivadass that the Supreme Court was examining as to whether the assessee therein could shift his stand after failing to reexport the goods. We may record that the assessee therein had initially claimed the benefit of notification No. 158/95-Cus. The goods were rejected by the foreign buyer. The assessee could not re-export the goods. At that point of time assessee sought to claim benefit under Notification No. 94/96-Cus. In those circumstances the Apex Court has held that assessee cannot approbate and reprobate. Hence on facts, the said authority does not support Revenue s case. With regard to the second authority in COMMISSIONER OF CUSTOMS, HYDERABAD VERSUS M/S. PENNAR INDUSTRIES LTD. ANOTHER 2015 (8) TMI 56 - SUPREME COURT , Shri. Shivadass urged that appellant does not deny the power of the customs authority to initiate action. However, once at the instance of the customs authority, the Licensing authority initiates action, examines the factual position and holds the issue in favour of appellant; such finding is binding on the Customs authorities. Further, in the case of Pennar Industries, the goods were raw material and not capital goods. Hence, the ratio of the said authority is applicable to the facts of this case. We have followed the decision of this Court in COMMISSIONER OF CUSTOMS VERSUS M/S. ADITYA BIRLA NUVO LTD., (FORMARLY KNOWN AS M/S. MADURA COATS LTD. / M/S. INDIAN RAYON INDUSTRIES LTD.,) 2021 (2) TMI 93 - KARNATAKA HIGH COURT and held that the decision of ADGFT is final. Therefore, the authority relied upon by the Revenue does not support its contention. With regard to the third authority in SHESHANK SEA FOODS PVT. LTD. VERSUS UNION OF INDIA 1996 (11) TMI 67 - SUPREME COURT , it is held that the provisions of import-export policy do not take away the power of Customs Authority. In that case, the assessee had approached this Court seeking a Writ of Prohibition restraining the Customs Authorities from proceeding with search and seizure operations. The writ petition was dismissed by the Hon ble Single Judge and the writ appeal by the Division Bench. In such circumstances, the Apex Court has held as aforesaid. In contradistinction, in the case on hand the ADGFT has adjudicated the matter and allowed the appeal. Therefore, the said authority does not support Revenue s case in any manner. Assessee s appeal merits consideration - Appeal allowed.
Issues Involved:
1. Violation of the actual user condition under the EPCG Scheme. 2. Interpretation of 'own manufacturing unit' or 'manufacturing for his own use' under the Foreign Trade Policy. 3. Jurisdiction of the Tribunal to examine eligibility criteria for EPCG Authorization. 4. Applicability of the Supreme Court's stare decisis in Titan Medical Systems Pvt. Ltd. case. Summary: Issue 1: Violation of Actual User Condition The Tribunal held that the appellant violated the actual user condition by using mobile capital equipment imported under the EPCG Scheme at locations other than those declared to the Licensing Authority. The appellant contended that the equipment was used solely for the declared purpose and remained under their ownership, possession, and control. Issue 2: Interpretation of 'Own Manufacturing Unit' The Tribunal ruled that the mines where the appellant deployed the imported capital goods must be owned by the appellant to be considered as 'own manufacturing unit' or 'manufacturing for his own use' under paragraph 9.5 of the Foreign Trade Policy. The appellant argued that they had exclusive permissive possession of the mines and that the DGFT had issued licenses knowing that private parties cannot own mines. Issue 3: Tribunal's Jurisdiction The Tribunal assumed jurisdiction to examine the eligibility criteria for the grant of EPCG Authorization, despite the DGFT Authorities not canceling the authorizations. The appellant argued that once the licensing authorities issued the licenses, the Customs Authority could not take a different view. Issue 4: Applicability of Supreme Court's Stare Decisis The Tribunal took a contrary view to the Supreme Court's decision in Titan Medical Systems Pvt. Ltd., which held that once a license is issued and not questioned by the licensing authority, the Customs authorities cannot refuse exemption on grounds of misrepresentation. The appellant argued that the Customs Authority has no jurisdiction to question the wrongful availment of benefits under the EPCG license. Judgment: 1. CSTA 4/2019 (Assessee's Appeal) is allowed. The Tribunal's order imposing duty and interest on the assessee is set aside. 2. CSTA 10/2019 (Revenue's Appeal) is dismissed. 3. The substantial questions of law are answered in favor of the assessee and against the Revenue. The court concluded that the appellant's appeal merits consideration and that the Customs Authority cannot take a different stand once the licensing authority has issued the licenses. The ADGFT's decision, which allowed the appellant's appeal and attained finality, is binding on the Customs Authorities.
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