EPCG exemption retained where export obligation was fulfilled and customs could not ignore the licensing authority's recognition.

EPCG exemption under Notification No. 111/95-Cus was retained where the licensing authority treated two EPCG licences as covering the same export products and permitted continuation of the zero-duty facility. The imported capital goods were put to use, the export obligation was fulfilled, and the licensing authority issued a letter acknowledging such fulfilment. Allegations of misrepresentation were rejected because imports made before the amendment by Notification No. 70/97-Cus did not attract duty, and duty on later imports had been paid. Customs could not disregard the licensing authority's determination in the absence of any declaration that the licence was invalid.

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Issues: Whether the appellant was entitled to retain the zero-duty benefit under the EPCG licence by combining the value of two EPCG licences, and whether the demand of duty could be sustained on the alleged failure to satisfy the minimum import value condition and alleged misrepresentation.

Analysis: The appellant's entitlement was examined in the light of the EPCG scheme and Notification No. 111/95-Cus. The licensing authority had considered the appellant's request, treated the two EPCG licences as covering the same export products, and permitted retention of the zero-duty facility. The record also showed that the imported capital goods were put to use, the export obligation was fulfilled, and the licensing authority issued a letter recognizing such fulfilment. The finding of misrepresentation was rejected because no duty was payable on imports made prior to the amendment introduced by Notification No. 70/97-Cus, and the duty applicable on later imports had been discharged. The Customs authority could not disregard the licensing authority's determination in the absence of any declaration that the licence was invalid.

Conclusion: The appellant was entitled to the exemption and the duty demand was not sustainable.

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