2017 (12) TMI 103 - AT - Customs

Violation of EPCG Scheme - actual use condition - it was alleged that that two vehicles imported by M/s Hotel Tunga Regency Pvt. Ltd. were used for personal purpose - According to Revenue, even the documentary evidences failed to establish that the vehicles were exclusively used for the tourism purpose of the foreign tourists. There is no dispute by the appellant that the vehicles were used by the Directors (although appellant says at times used). So also appellant could not establish with clean hands that the vehicles were exclusively used for the tourism purpose of the foreign visitors to the hotel - Revenue s further submission is that the EPCG licence impose obligation on the appellant both on user criterion as well as earning of foreign exchange, it was the burden of the appellant to establish that it has fulfilled the condition of the notification, policy as well as the EPCG licence. Held that - Due to paucity of time the order could not be recorded - Order is reserved and expect to be pronounced by 10/12/2017.

Issues Involved:
1. Alleged violation of the EPCG scheme by using imported vehicles for personal purposes.
2. Maintenance of logbooks and records for the imported vehicles.
3. Fulfillment of the export obligation and foreign exchange earning requirements.
4. Adherence to the conditions of the EPCG license and Customs notification.
5. Evidence supporting the actual use of vehicles for foreign tourists.

Detailed Analysis:

Alleged Violation of the EPCG Scheme:
The appellant was accused of violating the EPCG scheme by using two imported vehicles for personal purposes of the Director instead of for transporting foreign tourists. The adjudicating authority did not find any substantial evidence to support this claim. The appellant argued that the EPCG license did not specifically require maintaining a logbook and that the vehicles were used for the intended purpose of ferrying foreign tourists, thus fulfilling the export obligation and earning foreign exchange.

Maintenance of Logbooks and Records:
The Revenue's contention was that the appellant failed to maintain proper logbooks to document the use of the vehicles for foreign tourists. However, the appellant highlighted that neither the EPCG license nor the Customs exemption notification specified the need for maintaining a logbook in a particular form. The requirement was to maintain records during the specified period, which the appellant claimed to have fulfilled.

Fulfillment of Export Obligation and Foreign Exchange Earning Requirements:
The appellant asserted that they met the export obligation and foreign exchange earning requirements as stipulated by the EPCG scheme. They presented evidence that the vehicles were used in providing services to foreign tourists, which contributed to the hotel's foreign exchange earnings. The DGFT had issued an export obligation discharge certificate without any objections, supporting the appellant's claim.

Adherence to Conditions of EPCG License and Customs Notification:
The appellant argued that they adhered to all conditions of the EPCG license and Customs notification. The vehicles were registered as required, and the foreign exchange earnings were documented. The appellant referenced the DGFT's clarification that as long as the vehicles were not misused and served the purpose of import, the duty exemption benefit was undeniable.

Evidence Supporting Actual Use of Vehicles for Foreign Tourists:
The Revenue presented several pieces of evidence to argue that the vehicles were not used for transporting foreign tourists. These included the lack of logbooks, statements from security personnel and drivers, and the absence of vehicles at the hotel premises. However, the appellant countered that these points did not conclusively prove that the vehicles were not used for their intended purpose. They cited the decision of the Delhi High Court in a similar case, which held that as long as foreign exchange was earned and the cars were used, there was no violation of statutory requirements.

Conclusion:
The Tribunal, after hearing both sides, reserved the order for a later date. The appellant maintained that they fulfilled all conditions of the EPCG scheme, while the Revenue argued that the appellant failed to prove the exclusive use of vehicles for foreign tourists, thus violating the scheme's conditions. The final decision was expected to be pronounced by December 10, 2017.

← Previous Next →