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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the appellant had fulfilled the export obligation under the EPCG Scheme so as to retain the benefit of the customs exemption notification, where the exported goods counted towards discharge of obligation were not manufactured in the factory where the imported capital goods were installed.
Analysis: The export obligation under para 4.1 of the EXIM Policy 1992-97 required export of goods manufactured or produced by use of the capital goods imported under the EPCG Scheme. The exemption notification likewise confined the benefit to products manufactured with the use of the imported capital goods. The record showed that the goods exported for claiming discharge were manufactured in a different factory and not with the imported capital goods. Mere production of an export obligation discharge certificate could not override the substantive condition of the notification. The cited circular also proceeded on the basis that the exported goods must be manufactured using the capital goods imported against the relevant EPCG licence.
Conclusion: The export obligation was not validly fulfilled and the appellant was not entitled to the exemption benefit. The customs duty demand was therefore sustainable, and the appeal was dismissed.
Ratio Decidendi: Under the EPCG Scheme, exemption is available only when the exported goods are manufactured or produced with the use of the capital goods imported under the licence, and a discharge certificate does not cure non-compliance with that substantive condition.
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