Customs exemption under EPCG scheme sent back for reconsideration after circular clarified eligibility for licence holders.

Customs exemption under Notification No. 28/97-Cus. required fresh examination where a later CBEC circular clarified eligibility for EPCG licence holders. The appellant claimed that the imported items were covered by the EPCG licence and that export obligations had been met, while the Revenue had not effectively addressed the circular. The CESTAT remitted the matter to the original authority for reconsideration on the applicability of the circular and the appellant's eligibility for exemption, and the appeal was allowed by way of remand.

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Issues: Whether the denial of customs exemption under Notification No. 28/97-Cus. in respect of the imported items required reconsideration in the light of the CBEC circular clarifying eligibility for EPCG licence holders.

Analysis: The appellant claimed the benefit of the exemption for items imported under the EPCG scheme. A subsequent Board circular clarified that the items mentioned therein could be eligible for the benefit, provided the importer had been issued the EPCG licence for such items. As the Revenue could not place the circular for effective consideration and the appellant asserted possession of the licence and fulfilment of export obligation, the matter required fresh examination by the original authority.

Conclusion: The issue was remitted to the original authority for reconsideration in the light of the circular and the appeal was allowed by way of remand.

Final Conclusion: The denial of exemption was not finally upheld and the dispute was sent back for fresh adjudication on the applicability of the circular and EPCG eligibility.

Ratio Decidendi: Where a later Board circular clarifies eligibility for exemption under an EPCG-linked customs notification, and the relevant licence and export-obligation compliance are asserted, the matter should be re-examined on merits rather than conclusively rejected without considering the clarification.

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