EPCG import licence protected the vehicle import; customs could not insist on homologation compliance or enforce confiscation.

Import under a specific EPCG licence could not be denied by customs on the basis of additional import restrictions or homologation requirements not expressed in the licence, especially where the licensing authority had granted permission on the declared vehicle model and the policy was later relaxed. The Tribunal held that homologation testing and CMVR compliance burden lay in the relevant regulatory chain and could not be insisted upon from the importer on these facts. Confiscation, penalty, and enforcement of the bond and bank guarantee were therefore unsustainable and were set aside.

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Issues: (i) Whether the import of the vehicle under the EPCG licence was protected from customs objection based on import restrictions and homologation requirements; (ii) whether a homologation certificate and CMVR compliance could be insisted upon from the importer; and (iii) whether the confiscation, penalty, and enforcement of the bond and bank guarantee were sustainable.

Issue (i): Whether the import of the vehicle under the EPCG licence was protected from customs objection based on import restrictions and homologation requirements.

Analysis: The import was made under a specific EPCG licence issued on the basis of the vehicle model declared to the licensing authority. The licensing authority had power under the EXIM Policy to grant permission notwithstanding other import restrictions, and any additional restriction ought to have been incorporated in the licence itself. The later relaxation in policy also supported a beneficial construction in favour of the importer.

Conclusion: The import under the EPCG licence could not be denied on the basis of the customs objection to the import restriction, and this issue was decided in favour of the assessee.

Issue (ii): Whether a homologation certificate and CMVR compliance could be insisted upon from the importer.

Analysis: The notification and the CMVR framework contemplated testing of the prototype and placed the compliance burden in the relevant regulatory chain, not on the end-user importer in the facts of the case. The Tribunal followed the earlier decision relied upon by the importer and held that the customs authorities could not insist on a homologation certificate from the importer in these circumstances.

Conclusion: The insistence on a homologation certificate and CMVR compliance from the importer was rejected, and this issue was decided in favour of the assessee.

Issue (iii): Whether the confiscation, penalty, and enforcement of the bond and bank guarantee were sustainable.

Analysis: The show cause notice and adjudication did not establish a basis for treating the import as liable to confiscation, and the bond and bank guarantee were found to have been executed only for the limited conditions of the relevant customs notification and export obligation. The departmental attempt to enforce the bank guarantee was also inconsistent with the binding circular governing such recovery.

Conclusion: The confiscation, penalty, and enforcement of the bond and bank guarantee were unsustainable and were set aside in favour of the assessee.

Final Conclusion: The impugned order was quashed, the vehicle confiscation and penalty were cancelled, and the bond and bank guarantee were directed to be released and discharged.

Ratio Decidendi: Where a specific import licence is issued on the facts placed before the licensing authority, customs cannot import additional conditions not contained in the licence or compel compliance burdens that the governing scheme places elsewhere, and consequential confiscation or recovery action based on such unexpressed conditions cannot stand.

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