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TMI Blog2007 (4) TMI 476X X X X Extracts X X X X X X X X Extracts X X X X ..... -4-97. Revenue issued Show Cause Notice to the appellant for violation of the conditions prescribed at proviso (a) to the Condition No. 5 of the said Notification. In terms of the said condition, the EPCG licence holder should have imported minimum CIF value of Rs. 1/- crore within a period of two years. The Show Cause Notice proposed to confiscate the impugned goods under Section 111(o) of the Customs Act. Penalty under Section 112(a) was also proposed. An addendum to the Show Cause Notice was issued for demanding customs duty amounting to Rs. 10,52,673/-. Appropriate interest as provided in the Notification was also demanded. There was also a proposal to appropriate an amount of Rs. 11/- lakhs by invoking the bank guarantee towards the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligation to be fulfilled by the year 2006 was Rs. 6.4 crores and during the first two block years, only 50% of the this amount i.e. Rs. 3.2 crores was to be fulfilled, whereas they have fulfilled export obligation worth Rs. 4.28 crores. (v) The EPCG scheme allows the licence holder to purchase capital goods covered under the licence from the domestic manufacturer instead of importing them. For this purpose, the licence is invalidated in respect of the goods to be procured domestically. In the present case, the invalidation is for automatic cone winder . The licence was amended to this extent. Under the said amendment, the licencing authority has categorically treated the CIF value of invalidation as utilization of EPCG licence and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are liable for confiscation. The duty demand is in order. The appellants are liable for penalty and payment of interest as provided in the Notification. 5. We have gone through the records of the case carefully. The issue in the present appeal relates to the interpretation of Customs Notification No. 29/97 read with EXIM Policy. 5.1 The EPCG scheme provides for import of capital goods under concessional rate of duty subject to fulfilment of export obligation to be fulfilled over a period of eight years reckoned from the date of issue of licence. The export obligation is related to the value of capital goods imported. It may be 5 times the CIF value of capital goods on FOB basis or 4 times the CIF value of capital goods on NFB basis. Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lture, pisciculture, viticulture, poultry, sericulture, bio-tech, engineering, textile and chemical sectors, or (b) To tourism industry for rendering services, the minimum value together with the value of the spares specified in the Table annexed hereto shall be rupees one crore : Provided further that in case of licences issued with an obligation to export products of software sector, the minimum value together with the value of the spares specified in the Table annexed hereto shall be rupees ten lakhs : Provided also that the aforesaid conditions of minimum value of import which is rupees twenty crores, or rupees one crore, or rupees ten lakhs, as the case may be, shall be deemed to have been complied with where the shortfall in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra 6.8, there is a provision for sourcing the capital goods from a domestic manufacturer instead of importing them under the EPCG scheme. When such a provision is there, denial of benefit under the scheme on the ground that procurement from domestic supplier would not be considered for purposes of condition 5(a) of the Notification renders the scheme meaningless. It should be borne in mind that if an EPCG licence holder has a contract with a domestic manufacturer for supply of capital goods, the domestic manufacturer himself can obtain EPCG licence for import of components required for the manufacturing of the said capital goods. In order to interpret condition 5(a) of the Notification, all these provisions of EXIM policy have to be read t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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