Misuse of EPCG Scheme: Settlement Application Granted with Duty Liability Payment

The applicant was found to have misused the EPCG Scheme by importing high-value cars and evading customs duty. Investigations revealed misrepresentation and fraudulent activities in obtaining licenses and failure to fulfill export obligations. The applicant admitted duty liability in a settlement application, refuting allegations of selling cars. The Commission allowed settlement applications, directing payment of admitted duty liability within 30 days with immunity from fines, penalties, and prosecution upon full disclosure. Interest waiver was limited to 10%, with a bank guarantee requirement. Immunity from prosecution was granted under Section 127H of the Customs Act, subject to no fraud in settlement.

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Issues: Misuse of EPCG Scheme, Evasion of Customs Duty, Settlement Application

Misuse of EPCG Scheme:
The case involved specific intelligence indicating misuse of the EPCG Scheme by importing high-value cars and evading customs duty. Investigations revealed that the applicant had imported 31 high-value cars under different licenses issued under the EPCG Scheme. The applicant was found to have imported 5 cars under a particular license, misrepresenting facts and fraudulently obtaining the license. The applicant failed to fulfill export obligations, with remittances declared as export earnings without providing the required services. The applicant also violated the actual user condition by selling the cars before completing export obligations, thus contravening Customs Notification No. 49/2000.

Evasion of Customs Duty:
Following investigations, the applicant was issued a Show Cause Notice demanding duty payment of Rs. 62,58,173. The applicant admitted the duty liability in their settlement application before the Commission, acknowledging the amount demanded in the notice. The applicant refuted allegations of selling the cars, claiming the vehicles were registered as taxis in their name.

Settlement Application:
The applicant, along with co-noticees, filed settlement applications before the Commission. The Commission allowed the applications to proceed, directing the applicant to pay the admitted duty liability within 30 days and execute a bond with a bank guarantee. The Commission granted immunity from fine, penalty, and prosecution to the applicants upon finding full and true disclosure of duty liability. Interest waiver was limited to 10%, with the applicant required to pay simple interest at that rate from the import date till payment. The Bank Guarantee was to be released after the interest payment. Immunity from prosecution was provided under Section 127H of the Customs Act, subject to the settlement not being obtained through fraud or misrepresentation.

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