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TMI Blog2023 (12) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... tting extensions of time. Further on 25.03.2019, they submitted letter to the adjudicating authority informing that they are in the process of complying with the conditions of the EPCG Committee s decision. This being so, it was incumbent upon the adjudicating authority to give the appellants reasonable time to comply with the conditions and should not have passed the order in a hurried manner even without grant of personal hearing. The EPCG Committee had not prescribed any time limit for compliance of the conditions. The assessee is then supposed to comply within a reasonable time. The assessee has been diligent to comply within a time period of about three months - The DGFT and Customs have to act hand in hand to give effect to the object of issuing such beneficial schemes. It should not be a tug of war so as to drive the assessee from pillar to post and getting their resources tied up in litigations. We therefore find that the changed circumstances as to the extension of period and compliance has to be taken into consideration. The EPCG Committee has not stated any time period to comply with the conditions. There is no mention in the order of EPCG Committee that the extension of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red at M/s ALL were being marketed by M/s ALL through their dealer network. 3. Based on intelligence, the Officers of DGCEI-CZU visited the premises of M/s ALNVL and other companies on various dates and caused verification of records/documents. During the course of verification, it was revealed that M/s ALNVL had imported capital goods under the EPCG Scheme at Zero duty / 3% concessional rate of duty and installation certificates had been obtained for installing the said capital goods at nine premises of supporting manufacturers of M/s ALNVL including M/s RNAIPL. 4. The documents and the customs data showed that M/s. ALNVL had imported Capital goods at zero duty / 3% concessional rate of customs duty under the EPCG scheme under the cover of 65 EPCG Licences as under : a) 14 EPCG Licences valued at around Rs. 75.45 Crore Involving a duty foregone amount of Rs. 18.65 Crore for the manufacture of LCVs, namely, Dost , Partner and Mitr' at M/s. ALL; and b) 51 EPCG Licences valued at around Rs. 334 Crore involving a duty foregone amount of Rs. 89.07 Crore for the manufacture of 'Evalia' and 'Stile', at M/s RNAIPL and their supporting manufacturers/vendors. 5. On verif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s towards their Customs duty liability for non-fulfilment of Export obligation as detailed in paragraph 11.0 of the SCN. 8. The summary of the violations alleged by department are as under:- (i) M/s. ALNVL have failed to achieve the minimum of 50% export obligation in respect of 23 EPCG authorisations, issued in terms of customs notification no. 102/2009 dated 11/09/2009, within the block period of 1st to 4th year. M/s ALNVI, is therefore, liable to pay the proportionate duties of customs along with applicable interest, within 3 months from the expiry of the block of years to the extent of non-fulfilment of export obligation in respect of the said 23 EPCG authorizations. (ii) Besides, M/s. ALNVL had also indulged in diversion of capital goods to unauthorized premises, imported under nine EPCG authorizations, including the capital goods imported under six out of the 23 EPCG authorizations, for which, the minimum 50% export obligation has not been fulfilled. Therefore, the benefit of Customs Notification no. 102/2009-Cus and 103/2009-Cus both dated 11/09/2009 (as the case may be), is liable to be denied in respect of the goods imported under the nine EPCG authorizations. (iii) Apart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and Seventy-Three, only) from Ashok Leyland Nissan/Ashok Leyland under section 143(3) of the Customs Act, 1962 read with notification no. 103/2009- Customs dated 11/09/2009, and the bonds furnished thereof; (iv) I demand Interest at the rate of 15% from Ashok Leyland Nissan/Ashok Leyland as per Notification No. 103/2009 both dated 11.09.2009 on the duty demanded at (iii) above from the date of import of the goods; (v) I deny the exemption availed under notification no. 102/2009-Customs dated 11/09/2009 in respect of the capital goods imported as detailed against six licenses mentioned at Table-4 at para no.37.4 of this order. I demand customs duty of ₹10,77,24,468/- (Rupees Ten Crore, Seventy Seven Lakh, Twenty Four Thousand, Four Hundred and Sixty-Eight only) from Ashok Leyland Nissan/Ashok Leyland Limited under section 143(3) of the Customs Act, 1962 read with notification no. 102/2009- Customs dated 11/09/2009, and the bonds furnished thereof; (vi) I demand Interest at the rate of 15% from M/s Ashok Leyland Nissan/Ashok Leyland Limited as per Notification No. 102/2009 both dated 11.09.2009 on the duty demanded at (v) above from the date of Import of the goods: (vii) I de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s / sub contractors under section 112 (b) of the Customs Act, 1962. (i) I impose penalty of ₹10,00,000/-(Rupees Ten Lakhs Only) on M/s Renault Nissan Automotive India Private Limited, Plot No. 1, SIPCOT Industrial Park, Oragadam, Mattur (Post), Sriperumbudur Taluk, Kanchipuram District, Tamilnadu 602105, for diverting/ non availability of imported capital goods under EPCG Scheme in the capacity of Supporting Manufacturer for full life period of machines, even before fulfilling the Export Obligation; (ii) I impose penalty of ₹10,00,000/-(Rupees Ten Lakhs Only) on M/s Gestamp Automotive Chennai Private Limited, Plot No. B12, SIPCOT Industrial Park, Phase IL Vengadu Village, Pillaipakkam Post, Sriperumbudur Taluk, Kanchipuram District, Tamil Nadu-602105, for having installed the diverted premises; (iii) I impose penalty of ₹10,00,000/-(Rupees Ten Lakhs Only] on M/s Myoung Shin India Automotive Pvt Ltd. No. 496/2, Mannur Village, Valarpuram, Sriperumbudur, Kanchepuram, Tamil Nadu 602 105, for having diverted the Impugned capital goods Imported under the EPCG Scheme, to an unauthorised premises; (iv) I Impose penalty of ₹10,00,000/-(Rupees Ten Lakhs Only) on M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara no.39.1of this order. I demand customs duty of ₹12,26,700/- (Rupees Twelve Lakh, Twenty-Six Thousand and Seven Hundred, only) from M/s Ashok Leyland Nissan/Ashok Leyland Limited under section 143(3) of the Customs Act, 1962 read with notification no. 102/2009- Customs dated 11/09/2009 and the bonds furnished thereof, (iv) I demand interest at the rate of 1596 from M/s Ashok Leyland Limited as per Notification No. 102/2009-Customs dated 11.09.2009 on the duty demanded at (ii) above from the date of import of the goods; (v) I order confiscation of the seized goods valued at ₹3,11,59,224/- (Rupees Three Crore, Eleven Lakh, Fifty-Nine Thousand, Two Hundred and Twenty-Four, only) (A.V.) under section 111(d) and 111(0) of the Customs Act, 1962. However I give option for redemption of the said goods U/s 125 of the Customs Act 1962, on payment of redemption fine of ₹30,00,000/-(Rupees Thirty Lakhs Only) (vi) I order confiscation of the goods other than the seized goods mentioned above, valued at ₹62,82,547/- (Rupees Sixty-Two Lakh, Eighty-Two Thousand, Five Hundred and Forty-Seven, only) (A.V.), under section 111(d) and 111(0) of the Customs Act, 1962. However I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les besides other automobiles to cater to domestic and international markets. The said Joint Venture company (the appellants herein), subsequently did not have any manufacturing facility in India and hence entered into a Contract Manufacturing Arrangement / Agreement with Renault Nissan Automotive Ltd., Oragadam, Sriperumbudur, Tamil Nadu for manufacture of passenger vehicles in the name of Stile , Evalia etc. and with Ashok Leyland Limited for manufacture of commercial vehicles at their Hosur Plant in the name of Dost , Partner , Mitra etc. Availing of EPCG Benefits from Ministry of Commerce: 11. It is submitted by the learned counsel that the JV company viz Ashok Leyland Nissan Vehicles Limited, had plans to export their manufactured products in view of the huge overseas market potential that existed for such vehicles at that point of time. As the high end technical specifications of the product would require capital goods which were not available indigenously they had to import. The Company decided to avail the benefits under EPCG Scheme in terms of the Foreign Trade Policy of the GOI. Accordingly, the company obtained 51 EPCG Authorizations during the period from September 2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpliance aspects. The DGCEI entertained a doubt that the appellants have not complied with the conditions imposed under the EPCG scheme at all. Subsequently the case was transferred to DRI, Chennai Unit as only Customs have the jurisdiction to verify or investigate import related matters. 13.1 On a thorough review of all the 51 EPCG authorizations, they could not find any deviation including procedural ones in respect of 25 EPCG authorizations which pertain to capital goods imported and installed in the premises of Ashok Leyland. However they could identify procedural lapses in the case of 26 EPCG authorizations pertaining to goods imported and installed in the premises of Renault Nissan and their supporting manufacturers. 13.2 It was clarified to the co-noticees by the appellants that the allegations are only procedural in nature and the FTP issued by GOI allows condonation in all such cases and appellants have enough time to approach authorities seeking their permission for such condonation. Appellants also then paid an amount of Rs 11.92 crores during the investigation reserving their right to appeal in case of demands raised against them at a later point of time. In the mean ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter such statutory compliances as required consequent to the merger the appellant approached the EPCG Committee/ Policy Relaxation Committee, New Delhi for Condonation of procedural lapses and extension of Export Obligation fulfilment period. 16.1 The Foreign Trade Policy provides for granting of extension of export obligation period wherever obligation could not be fulfilled on time due to valid reasons and also provides for condoning procedural lapses. The appellants vide letters dated 13.03.2018, 07.5.2018, 19.05.2018, 28.05.2018, 21.6.2018, 25.06.2018, 19.11.2018, and 14.12.2018 requested EPCG Committee for relaxations and also requested the adjudicating authority to keep the adjudication pending till the decision of the DGFT committee. The adjudicating authority had given extension of the hearing of the case several times. Decisions of the EPCG / PRC Committees - DGFT, New Delhi 16.2 The EPCG Committee vide its decision dated 13.02.2019 approved the request and granted extension of export obligation period in respect of 14 (out of the 26) licenses for two years. This order of extension was subject to payment of compensation fees as prescribed under the FTP and to be regularize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions against their other licenses. 17.3 It normally takes time at DGFT to consolidate various cases of different exporters, collating the same and to place before the committee meetings for discussions and decisions. On account of this, the appellants were seeking adjournment with the adjudicating authority so as to wait till final outcome from DGFT, New Delhi. 17.4 The appellants submitted around 18 letters to the adjudicating authority seeking time and informing the progress of the matter pending before DGFT, New Delhi. The Adjudicating authority had been kind enough to grant time several times considering the merits involved in the case. 17.5 The appellants on 25.03.2019 had submitted before the adjudicating authority that they had obtained order of extension and was in the process of complying with the EPCG Committee's decision once the minutes are cleared and received. Once the PRC committee's decision was released, the same was informed to the adjudicating authority. 17.6 While the appellant was awaiting a final chance to submit documents evidencing compliance of the Committee's decision, to their surprise the adjudicating authority passed the impugned order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the appellants before passing the order. Though the previous adjudicating authority had adjourned the hearings for approaching the DGFT, the authority who passed the impugned order, simply chose to ignore the decisions of the competent authority (DGFT) and proceeded to pass the exparte order without hearing the appellants. The impugned order is in violation of the principles of natural justice. 18.4 The Ld. Counsel submitted that the Adjudicating Authority should have acted in an objective manner to protect the legitimate rights of the industry which would ensure substantial growth in business and particularly in export matters. The order of the adjudicating authority goes against the principles of ease of doing business and also the against maxim Taxes and Duties are not to be exported . 18.5 Without prejudice to the above, it is argued that the adjudicating authority had proceeded to confirm the proposal in SCN to confiscate the goods which is patently illegal and unsustainable. The very fact that the competent authority had allowed extension of time for fulfilment of Export Obligation period, and condoned the procedural lapses and that exports had happened based on such ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions are deemed to have been taken in public interest. 19.1 The Appellants also submit that it is settled law that as far as FTP is concerned, whenever a question of interpretation of policy or procedural compliance, the decision of the DGFT is final and binding on all Authorities concerning implementation (Para 2.3 of FTP) of the licence. In view of the above position of law, the DGFT having granted extension of EO period to all the licenses concerned and also condoned the procedural infractions, denying the benefit alleging that appellant did not report compliance of conditions imposed by DGFT is too flimsy especially in the circumstances where export obligation have been completed in full within the time granted by the EPCG and PRC Committees. Present Status: Totally 26 EPCG Authorizations are involved. 20. The Appellants submit that out of the 26, in respect of 12 cases, PRC Committee had allowed extension of EO period for two years and had condoned all procedural issues like installation of goods imported in a different places other than the place which is endorsed in the authorizations. Exports have been completed (100%). Necessary composition fees were paid, application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not fulfilled for any block, the importer shall within three months from the date of expiry of the said block period pay duties of customs equal to the amount of duty foregone. 24. The Hand Book of Procedure (HBP) 2009-14 was referred to by the learned special counsel to submit that as per the para 5.8 of this HBP, the authorization holders shall fulfil the export obligation over the specified period as per provisions mentioned therein. Para 5.8.3 states that when the export obligation is not fulfilled within the specified period or extended period, the authorization holders shall pay the duties of customs within three months from expiry of block years. As per para 5.11 only one extension of two year can be granted to first block year period in the case of Zero Duty EPCG scheme. Para 5.7 states that in case of failure to fulfil export obligation or any other condition of authorization, the authorization holder shall be liable for action under FT (D R) Act, 1992, Orders, Rules made thereunder, provisions of FTP and Customs Act, 1962. 25. In the present case, authorizations were issued from 2011 to April 2012. The 1st block year ended during the April 2016. The importer neither s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty within 3 months from the relevant date i.e before end of July 2018. The duty foregone has not been paid by them. 28. There is no error committed by the adjudicating authority in passing the impugned order. 29. The contention of the appellant that the original authority should have granted them more time to submit the compliance of DGFT orders was countered by the Special Counsel by putting forward the argument that more than one year had lapsed from the relevant date of July 2018. There is no merit in submitting that the original authority ought to have waited for complying with the conditions of the orders of DGFT in regard to extension of the license. It is asserted by the learned special counsel that on the date of passing of the Order-in-Original, the appellant had violated the substantial condition of the notification and therefore the demand, interest and penalties confirmed in the order along with order of confiscation is valid and sustainable. 30. When exemption of duty is granted subject to the condition, it is not sufficient that there is substantial compliance. The export obligation should have been fulfilled within the time limit. As per para 5.11 of the HBP (EXIM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #10003; 3. 0430010440 102/2009 ✓ ✓ 4. 0430010441 102/2009 ✓ ✓ 5. 0430010442 102/2009 ✓ ✓ 6. 0430010495 102/2009 ✓ 7. 0430010607 102/2009 ✓ 8. 0430010683 102/2009 ✓ 9. 0430010755 102/2009 ✓ 10. 0430010806 102/2009 ✓ 11. 0430010837 102/2009 ✓ 12. 0430010851 102/2009 ✓ 13. 0430010916 102/2009 ✓ 14. 0430010917 102/2009 ✓ 15. 0430010918 102/2009 ✓ ✓ 16. 0430010919 102/2009 ✓ 17. 0430010928 102/2009 ✓ 18. 0430010929 102/2009 ✓ 19. 0430010931 102/2009 ✓ ✓ 20. 0430010932 102/2009 ✓ 21. 0430010939 102/2009 ✓ ✓ 22. 0430010946 102/2009 ✓ ✓ 23. 0430010988 102/2009 ✓ ✓ 24. 0430010989 102/2009 ✓ ✓ 25. 0430010990 102/2009 ✓ 26. 0430011130 103/2009 ✓ 27. 0430011131 103/2009 ✓ 28. 0430011132 103/2009 ✓ 33.3 The Ld. Counsel for appellant has explained that due to demerger of JV, its further merger and due to bad market conditions there was some difficulty in fulfilling the export obligation within the time period. The FTP provides for condonation of such laps ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ider the extension of period. They also made request to inform the Customs authorities so as to keep the adjudication pending. The relevant part of letter dt. 21.06.2018 reads as under : Respected Sir, This has reference to our representations on the subject and our latest letter requesting for a personal hearing to consider our case for extension of export obligation period and regularization of other alleged procedural irregularities. We have informed the Commissioner of Customs. (Chennai IV) who is adjudicating the issue that our request is under consideration by DGFT, New Delhi and had sought time. Customs authorities required a confirmation from the Office of the DGFT, to the effect that the issue is under consideration. We will be much obliged if our request is considered and a letter js sent to Commissioner of Customs (Chennai-IV), Custom House, Chennai. 33.9 The SCN is dated 15.09.2016. The adjudication was kept pending on the repeated requests made by appellants that they were taking steps with the DGFT authorities. The decision was passed by DGFT authorities approving the extension of time and condoning lapses in February and April 2019 as stated above. The adjudicating a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the year 2016 which is the end of first block period. In that case even if extended, the EO cannot be considered as fulfilled as the appellants have fulfilled EO much later only. 33.12 We have given careful consideration to the arguments of the Special Counsel. For better appreciation, the relevant part of the decision of the EPCG Committee passed on 13.02.2019 is as under : Sl.No. Firm s Name and Numbers EPCG Authorisation No. Subject Decision of the EPCG Committee 13. M/s.Ahok Leyland Vehicles Limited (Formerly Ashok Leyland Nissan Vehicles Limited 001/36/218/245/AM-17/EPCG-I 26 EPCG authorisations (i) Permission for shifting of capital goods in respect of 26 Authorisations to the premises of M/s.Ashok Leyland Ltd. M/s.Ashok Leyland Vehicles Ltd. (ii) The earlier installation of the Capital goods covered from Serial No.18 to 26 may be condoned and regularized, however, at this stage all the capital goods covered from Serial No.1 to 26 may be allowed to be shifted to the premises as mentioned above; (iii) That extension in EOP for 2 years may be granted for all the 26 Authorisations for fulfilment of EO. 8. In view of the above, the Committee after deliberations was of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing with the conditions of the EPCG Committee s decision. This being so, it was incumbent upon the adjudicating authority to give the appellants reasonable time to comply with the conditions and should not have passed the order in a hurried manner even without grant of personal hearing. The EPCG Committee had not prescribed any time limit for compliance of the conditions. The assessee is then supposed to comply within a reasonable time. The assessee has been diligent to comply within a time period of about three months. These authorizations / EPCG licenses are issued as part of Foreign Trade Policy for export benefits so as to earn foreign exchange for the country. The DGFT and Customs have to act hand in hand to give effect to the object of issuing such beneficial schemes. It should not be a tug of war so as to drive the assessee from pillar to post and getting their resources tied up in litigations. We therefore find that the changed circumstances as to the extension of period and compliance has to be taken into consideration. 33.14 The EPCG Committee has not stated any time period to comply wit the conditions. There is no mention in the order of EPCG Committee that the extension ..... X X X X Extracts X X X X X X X X Extracts X X X X
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