2023 (6) TMI 1254 - AT - Customs

EPCG License - cancellation on the ground that the Appellant was not entitled to import the capital goods under concessional rate of Customs Duty - seeking waiver of interest and penalty - HELD THAT - The facts are not in dispute and both sides agree that the EPCG Licences were issued in 2007 but were cancelled by DGFT in 2013. So far as the Customs Duty initially saved is concerned, in terms of Notification No.97/2004-Cus and 64/2008-Cus, the Appellant has the liability to discharge the Customs Duty along with applicable interest as per Para 2(5) of these Notifications, if the conditions of these Notifications are not fulfilled. Therefore when Licence has been cancelled and Customs Duty is paid, the interest liability on such Customs Duty payment cannot be waived. Hence, the prayer of the Appellant to waive the interest is rejected. However, going through the documents submitted by them, it is seen that the Appellant has written a letter on 30/12/2013 submitted to the Department on 02/01/2014 wherein they have requested to Commissioner to realize the Customs Duty by encashing the Bank Guarantee. It is seen from letter F. No. S60(MISC)-265/14A.EPCG dated 12/08/2016 issued by the office of the Deputy Commissioner of Customs, the Bank Gurantee has been enchased on 07/03/2014 and 25/02/2015. This means that the encashment is after more two months in respect of two Bills of Entry and after about one year four months in respect of the other two Bills of Entry. The Adjudicating Authority is directed to re-calculate and requantify the interest payable by taking the realization date as 03/01/2014 as their consent to the Department for encashment of Bank Guarantee was given on 02/01/2014 itself. Appeal disposed off.

Summary

Issues involved:
The issue involves the cancellation of EPCG Licences by DGFT after a delay of six years, leading to a demand for payment of Customs Duty foregone along with interest. The Appellant contests the interest amount demanded by the Department after encashment of the Bank Guarantee.

Judgment Summary:

Issue 1: Delay in cancellation of EPCG Licences and Customs Duty liability:
The Appellant, a service provider, imported capital goods under concessional Customs Duty rates via EPCG Licences issued in 2007, which were cancelled by DGFT in 2013. The Department demanded payment of Customs Duty foregone, along with interest. The Appellant requested to pay the Customs Duty through encashment of Bank Guarantee, seeking waiver of interest and penalty. The Tribunal noted the cancellation of Licences and the Customs Duty liability under relevant Notifications, directing the Appellant to pay the re-quantified interest within 30 days from the date of requantification.

Issue 2: Justification for interest charges:
The Appellant argued against the interest charges, citing the sudden cancellation of Licences after six years without prior enquiries by DGFT. The Department justified the interest charges based on the cancellation of Licences in 2013, requiring payment of Customs Duty foregone with interest. The Tribunal rejected the plea to waive interest, emphasizing the Appellant's liability to discharge Customs Duty and applicable interest as per relevant Notifications.

Conclusion:
The Tribunal upheld the Department's decision to demand payment of Customs Duty foregone along with interest post the cancellation of EPCG Licences. While rejecting the plea to waive interest, the Tribunal directed the Adjudicating Authority to re-calculate and requantify the interest payable based on the realization date of the Bank Guarantee, with the Appellant liable to pay the re-quantified interest within 30 days. The Appeal was disposed of accordingly.