EPCG vehicle import compliance requires tangible proof of breach before duty demand, confiscation, or penalty can stand.

Under the EPCG Scheme, concessional import of a vehicle for service activity remained valid where the department failed to prove breach of the actual user condition, tourist-purpose registration condition, or any prohibited sale or transfer before discharge of export obligation. The vehicle was registered in the company's name for tourist use, continued to be shown as a company asset, and there was no tangible evidence of diversion for personal use or other substantive non-compliance. Absence of an installation certificate, log book, or all-India permit display was insufficient on this record. Duty demand, confiscation, and penalty were therefore unsustainable.

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Issues: Whether the import of the vehicle under the EPCG Scheme violated the actual user condition, the tourist-purpose registration condition, or the prohibition against sale or transfer before discharge of export obligation, and whether duty demand, confiscation, and penalty were sustainable.

Analysis: The EPCG licence and Notification No. 103/2009-Cus permitted concessional import subject to export obligation, actual user condition, and registration of the vehicle for tourist purpose only. The record showed that the vehicle was registered in the appellant company's name for tourist purpose, there was no evidence of sale or transfer, and the vehicle continued to appear as a company asset. The absence of an installation certificate could not be treated as a breach for a movable capital good imported by a service provider. The material relied on by the department did not establish that the vehicle was imported solely for personal use of the CMD or that it was never used for hotel and tourism related services. Mere suspicion, parking at a particular place, absence of a log book, or non-display of an all India permit did not amount to proof of violation. The Tribunal also treated the DGFT policy framework and public notices as controlling for implementation of the EPCG Scheme.

Conclusion: No violation of the EPCG conditions was proved, and the duty demand, confiscation, and penalty were unsustainable.

Final Conclusion: The assessee's appeals succeeded with consequential relief, and the Revenue's appeal for enhancement of penalty failed.

Ratio Decidendi: Under the EPCG Scheme, concessional import of a vehicle for service activity cannot be denied or penalized unless the department proves by tangible evidence a breach of the actual user condition, a prohibited sale or transfer, or other substantive non-compliance with the notification and policy conditions.

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