2023 (1) TMI 908 - AT - Customs

EPCG scheme - Failure to fulfill the conditions of the Notification as the Export Obligation Discharge Certificate the EODC was not submitted within the stipulated time - HELD THAT - It is not in dispute that the license that was issued to the appellant under the EPCG Scheme mentions the export obligation period is twelve years. This fact has neither been disputed in the show cause notice nor in the two orders passed by the Additional Commissioner and the Commissioner (Appeals). The show cause notice, in fact, does not even mention the obligation period and only makes a general allegation that the appellant had failed to fulfill the conditions of the notification and submit the requisite evidence within the prescribed period regarding fulfillment of export obligation - It is non-submission of the Certificate of fulfillment of export obligation that has been stressed by the Additional Commissioner since the order holds that despite time having been granted to the appellant to submit the Certificate it was not submitted. It appears that show cause notice was issued to the appellant treating the total export obligation period to be eight years from the date of issuance of the license - It is also not disputed that the appellant had applied for the issuance of the Certificate on November 09, 2016 before the expiry of ten years but it was issued to the appellant by the DGFT only on December 09, 2016. The appellant cannot be blamed for delay of three days since the appellant had admittedly applied for issuance of the certificate on November 09, 2016. It cannot be said that the appellant had violated any of the conditions of the notification - Appeal allowed.

Summary

Issues Involved:
1. Validity of the show cause notice issued prior to the completion of the export obligation period.
2. Fulfillment of the export obligation within the stipulated period.
3. Delay in issuance of the Export Obligation Discharge Certificate (EODC) by the Director General of Foreign Trade (DGFT).

Issue-wise Detailed Analysis:

1. Validity of the Show Cause Notice Issued Prior to the Completion of the Export Obligation Period:
The appellant contended that the show cause notice dated October 14, 2015, was issued prematurely since the export obligation period was twelve years, and 50% of the total export obligation was required to be fulfilled by December 05, 2016. The Tribunal noted that the license issued under the EPCG Scheme mentioned a twelve-year export obligation period, which was not disputed in the show cause notice or the orders passed by the Additional Commissioner and the Commissioner (Appeals). The Tribunal concluded that the show cause notice could not have been issued prior to December 05, 2016, as it was based on an incorrect assumption of an eight-year obligation period.

2. Fulfillment of the Export Obligation Within the Stipulated Period:
The appellant provided evidence that it had applied for the issuance of the EODC on November 09, 2016, before the expiry of the ten-year period. The Tribunal observed that the appellant had indeed fulfilled the export obligation within the stipulated period, and any delay in obtaining the EODC was due to the DGFT's processing time. The Tribunal emphasized that the appellant could not be blamed for the DGFT's delay in issuing the certificate.

3. Delay in Issuance of the Export Obligation Discharge Certificate (EODC) by the DGFT:
The Tribunal referred to the Delhi High Court's decision in Smiiel vs. Deputy Commissioner of Customs, which held that delays by the DGFT in issuing the EODC cannot be attributed to the appellant. The Tribunal found that the appellant had applied for the EODC in a timely manner, and the certificate was issued on December 09, 2016, just a few days after the ten-year period expired. The Tribunal concluded that the appellant had not violated any conditions of the notification.

Conclusion:
The Tribunal set aside the order dated September 05, 2019, passed by the Commissioner (Appeals) and allowed the appeal with consequential relief(s), concluding that the appellant had fulfilled the export obligation within the stipulated period and could not be held responsible for the delay in issuing the EODC by the DGFT.