2013 (9) TMI 176 - AT - Customs

Nature of activity - Whether the imported capital goods should be directly put to use to earn foreign exchange or even indirect use was sufficient Held that - Differing views had been expressed on the issue taking into account the facts and circumstances of each case - what should be correct interpretation of the customs notification in the facts of the instant case had to be decided which can be done only at the time of final disposal of the case - the Customs authorities issued notice on the ground that the assesse violated the conditions of Notification No. 55/2003-Cus. and the provisions of EXIM policy 2002-07 on the ground that the imported car was not used for tourism purposes and thereby earning foreign exchange directly from the use of the aforesaid car. Demand of differential duty Confiscation of goods u/a 111(d) and 111(o) Penalty u/s 114A Waiver of pre deposit - Held that - Assesse had already deposited the differential duty at the time of investigation Assesse had made out a prima facie case for waiver of pre-deposit of balance amount of dues and interest on the duty and fine and penalty imposed on the main assesse and penalty imposed on the co-assesse waiver of balance pre deposit allowed decided in favor of assesse.

Summary

Issues:
Appeal against order-in-appeal regarding violation of EPCG scheme conditions, differential duty demand, confiscation of imported car, imposition of penalties, and time-barred duty demand.

Analysis:
The main issue in this case revolves around the violation of conditions of the EPCG scheme by the appellant, M/s. Travel Planners Pvt. Ltd., who imported a Toyota Camry car for use as capital goods in export of services but allegedly used it as a private vehicle for office purposes instead of earning foreign exchange directly. The Customs authorities issued a show cause notice alleging breach of Notification No. 55/2003-Cus. and EXIM policy, leading to confirmation of the duty demand, confiscation of the car, and imposition of penalties by the lower appellate authority.

The appellant argued that the customs notification and EXIM policy did not mandate the imported vehicle to be registered as a taxi for earning foreign exchange directly, emphasizing that they had obtained the Export Obligation Discharge Certificate (EODC) in 2007 itself. Additionally, they contended that the Customs had no jurisdiction to investigate post issuance of EODC and that the duty demand was time-barred.

Contrarily, the Revenue representative highlighted that the appellant's bond and bank guarantee with Customs had not been discharged, allowing enforcement of duty demand as per bond provisions. Moreover, they argued that misrepresentation to obtain EODC did not negate Customs' investigative powers, especially considering the admission that the car was used for office purposes, not tourism, breaching exemption conditions.

The Tribunal, after considering both sides, held that Customs retained the authority to investigate even after EODC issuance if fraud or misrepresentation was involved. They also rejected the time-bar argument, citing judicial precedents supporting enforcement based on bond terms. The interpretation of Notification No. 55/2003-Cus. was pivotal, with conflicting views from different cases, necessitating a final decision at the case's conclusion. Consequently, the Tribunal granted a waiver of pre-deposit for the balance of dues, including interest, fines, and penalties, with recovery stayed during the appeal's pendency.

In conclusion, the Tribunal's judgment addressed the issues of EPCG scheme violation, duty demand, confiscation, penalties, and time-barred demand comprehensively, providing legal reasoning and citing relevant precedents to support their decision.