9911796707
TMI Blog2010 (12) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The facts that led to the controversy are the following. Respondent is running a hotel mainly accommodating foreign tourists. Government of India issued customs Notification No. 44/2002 dated 19-4-2002 under Section 25(1) of the Customs Act granting concessional rate of duty at 5% on capital goods imported under valid licence issued under Export Promotion Capital Goods (EPCG) Scheme. The condition for granting concessional rate of duty for the import of capital goods based on licence issued under the EPCG Scheme is that importer should execute surety and guarantee agreement in favour of the customs department to fulfill the export obligation, that is to earn five times the CIF value of the goods imported on FOB basis in convertible foreign exchange within a period of 8 years from the date of issue of licence. A further condition for permitting import of capital goods at concessional rate of duty at 5% is that the importer should, within six months from the date of completion of import, furnish installation report of the capital goods imported in their factory premises. Even though Notification as such is for import of capital goods for installation in production industry, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and produced details of foreign exchange earnings from the hotel as a whole, which are essentially collection of rent, food charges, etc. and based on the same, the Joint Director General of Foreign Trade issued a discharge certificate under the EPCG Scheme stating that respondent has complied with the obligation of foreign exchange earnings in respect of the capital goods, namely, two imported BMW cars. Without independently making any enquiry about the genuineness of the certificate issued by the Joint Director General of Foreign Trade, the customs authorities released the bank guarantee, and security bond executed by the respondent under customs Notification No. 44/2002. 3. The customs department later found that the respondent notified the cars for sale in complete violation of the conditions on which respondent was allowed to import cars at concessional rate of 5% as against 160% payable. On enquiry it was found that the cars were not even covered by tourist taxi permit making the respondent ineligible to render the cars for use by the foreign tourists. When details of foreign earnings from the two items of capital goods imported, that is, two BMW cars, were called for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Trade will bar the department from proceeding to issue show cause notice and to take appropriate action including confiscation of cars. Counsel appearing for the respondent on the other hand submitted that discharge of obligation certificate issued under EPCG Scheme by the Joint Director General of Foreign Trade is binding on the customs department and therefore they cannot adjudicate the matter after release of Bank guarantee and security bond. The further contention raised by the respondent is that registration of the cars imported from abroad under EPCG Scheme as Tourist Commercial Vehicles was made mandatory under the Foreign Trade Policy issued for 2004-09 only on 14-6-2006 and so much so non-registration of the vehicles as tourist taxi vehicles under Section 66(1) of the M.V. Act is not a ground for treating the vehicles as private vehicles. He has also contended that adjudication order is barred by limitation under Section 28 which entitles the department to pass orders within the extended period of limitation of five years only in the case of collusion, suppression, fraud, etc. 5. After hearing both sides and after going through the adjudication order and the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e department submitted that it is the requirement under the notification and under the bond that respondent should maintain separate account for use of the vehicles. We are of the view that even if all the contentions of the respondent are admitted, what is clear from the facts on record is that respondent has not used the cars for rendering services to the foreign tourists except the limited services rendered to tourists who occupied two Presidential Suits, total collection of which in the first three years was only US $ 54,851. We are of the view that Joint Director General of Foreign Trade recklessly and indifferently issued the discharge certificate under the EPCG Scheme without reference to the customs notification under which concessional rate of import duty was availed by the respondent. This is not a case of customs rejecting the certificate issued by the Joint Director General of Foreign Trade or going against the export and import policy clarified by the DGFT as projected by respondent's counsel. In our view, going by the policy, at the maximum they could contend that without taking permit for the vehicles for use as tourist taxi, they could use the vehicles for rendering ..... X X X X Extracts X X X X X X X X Extracts X X X X
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