Export Obligation Discharge Certificate binds customs and defeats EPCG duty demand for alleged vehicle-use breach.

Under the EPCG scheme, registration of an imported vehicle as a tourist vehicle could be regularised through a later DGFT circular, and conversion made before issuance of the Export Obligation Discharge Certificate supported compliance. Once the competent licensing authority issues that certificate, customs authorities cannot independently disregard it or re-adjudicate alleged non-fulfilment of EPCG conditions to recover duty forgone. The article also notes that the scheme does not require foreign exchange to be earned exclusively through use of the imported car alone. On that basis, the duty demand and penalty were unsustainable.

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Issues: Whether the duty demand and penalty under the EPCG scheme could be sustained for alleged breach of licence conditions relating to registration of the imported vehicle as a tourist vehicle and fulfilment of export obligation, when the importer had obtained the Export Obligation Discharge Certificate.

Analysis: The imported vehicle was initially registered as a private vehicle, but the later DGFT circular permitted existing cases to be regularised by registration as a tourist vehicle within the stipulated time, and the appellant had made the conversion before the Export Obligation Discharge Certificate was issued. The decision also turns on the principle that once the licensing authority issues the Export Obligation Discharge Certificate, customs authorities cannot independently negate compliance with the EPCG conditions or recover duty forgone on the assumption of non-fulfilment of export obligation. The allegation that foreign exchange had not been earned exclusively through use of the vehicle was also rejected, as the scheme does not require such exclusive earning through the imported car alone.

Conclusion: The demand was unsustainable and the appeal succeeded.

Ratio Decidendi: Once the competent licensing authority issues the Export Obligation Discharge Certificate, customs authorities cannot disregard that certification and re-adjudicate alleged non-fulfilment of EPCG conditions to recover duty forgone.

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