EPCG redemption by licensing authority bars customs from denying exemption on alleged non-fulfilment of export obligation.

Where the licensing authority has redeemed an EPCG authorisation and certified full discharge of the export obligation, customs cannot later deny the corresponding exemption by re-agitating compliance with the EPCG conditions on a contrary view of the service exports. The imported capital goods were recorded as installed at the appellant's premises, and the export obligation statement filed before DGFT described the exports as cargo handling services. Since DGFT issued a redemption letter confirming fulfilment of the authorisation, the customs authorities could not reopen the issue merely by disputing the nature of the service exports. The exemption denial was therefore unsustainable, and the customs demand, confiscation, redemption fine and penalty were not maintainable.

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Issues: Whether the benefit of Notification No. 55/2003-Cus. dated 01.04.2003 could be denied by customs after the DGFT had redeemed the EPCG authorisation and certified discharge of the export obligation.

Analysis: The imported capital goods were shown as installed in the appellant's premises, and the export obligation statement filed before the DGFT described the services rendered as cargo handling services. The DGFT issued a redemption letter confirming that the export obligation under the EPCG authorisation had been met in full. In these circumstances, the customs authorities could not reopen the issue of compliance with the EPCG conditions merely by disputing the nature of the service exports. The settled principle applied was that where the licensing authority has accepted fulfilment of the licence conditions and granted redemption, the customs authorities cannot deny the exemption on a contrary allegation of non-fulfilment or misrepresentation.

Conclusion: The denial of the exemption was unsustainable, and the customs demand, confiscation, redemption fine and penalty could not be upheld against the appellant.

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