TaxTMI 
TaxTMI 
TaxTMI 
The Hon'ble Hyderabad CESTAT in the case of M/s Sri Havisha Hospitality & Infrastructure Ltd., Versus Commissioner of Customs Hyderabad - Customs - 2026 (2) TMI 1289 - CESTAT HYDERABAD dwelt with The Act of Impossibility for EO under EPCG Licenses, due to seizure of machinery itself. This case is a strong precedent for arguing that impossibility due to government action (seizure) cannot be equated with willful non-compliance. Here are the key pointers:
Key Legal Takeaways
Act of Impossibility: Courts and tribunals recognize that if machinery is seized, the exporter cannot reasonably fulfill export obligations. This makes penalties and confiscation questionable.
Notification 28/97 Condition 3: Duty computation must consider permissible exports already made, and depreciation of capital goods. Ignoring these factors makes the demand unsustainable.
Procedural Fairness: Orders passed without hearing the appellant or considering pending requests (extensions, third-party exports, depreciation) are legally vulnerable.
Outcome: In such cases, confiscation and penalties are often set aside, and matters remanded for proper re-computation of duty, acknowledging impossibility rather than deliberate default.
Compliance Insight for businesses operating under EPCG:
Always document external factors (like seizure, market conditions) that prevent fulfillment of obligations.
File timely requests for extensions, third-party exports, and depreciation-based duty computation.
If penalized, challenge on grounds of natural justice and notification-specific provisions