2023 (6) TMI 714 - HC - Customs

Appellant wins appeal, court rules in favor on legal questions, Customs bound by licensing authority's decisions.

M/s. Kalinga Commercial Corporation Ltd, P.K. Bhattacharya Addl. General Manager (Mining) M/s. Orissa Mining Corporation Ltd., S.K. Mall M/s. Barelion International Versus Commissioner Of Customs Bengaluru

M/s. Kalinga Commercial Corporation Ltd, P.K. Bhattacharya Addl. General Manager (Mining) M/s. Orissa Mining Corporation Ltd., S.K. Mall M/s. Barelion ... Issues Involved:1. Violation of the actual user condition under the EPCG Scheme.2. Interpretation of 'own manufacturing unit' or 'manufacturing for his own use' under the Foreign Trade Policy.3. Jurisdiction of the Tribunal to examine eligibility criteria for EPCG Authorization.4. Applicability of the Supreme Court's stare decisis in Titan Medical Systems Pvt. Ltd. case.Summary:Issue 1: Violation of Actual User ConditionThe Tribunal held that the appellant violated the actual user condition by using mobile capital equipment imported under the EPCG Scheme at locations other than those declared to the Licensing Authority. The appellant contended that the equipment was used solely for the declared purpose and remained under their ownership, possession, and control.Issue 2: Interpretation of 'Own Manufacturing Unit'The Tribunal ruled that the mines where the appellant deployed the imported capital goods must be owned by the appellant to be considered as 'own manufacturing unit' or 'manufacturing for his own use' under paragraph 9.5 of the Foreign Trade Policy. The appellant argued that they had exclusive permissive possession of the mines and that the DGFT had issued licenses knowing that private parties cannot own mines.Issue 3: Tribunal's JurisdictionThe Tribunal assumed jurisdiction to examine the eligibility criteria for the grant of EPCG Authorization, despite the DGFT Authorities not canceling the authorizations. The appellant argued that once the licensing authorities issued the licenses, the Customs Authority could not take a different view.Issue 4: Applicability of Supreme Court's Stare DecisisThe Tribunal took a contrary view to the Supreme Court's decision in Titan Medical Systems Pvt. Ltd., which held that once a license is issued and not questioned by the licensing authority, the Customs authorities cannot refuse exemption on grounds of misrepresentation. The appellant argued that the Customs Authority has no jurisdiction to question the wrongful availment of benefits under the EPCG license.Judgment:1. CSTA 4/2019 (Assessee's Appeal) is allowed. The Tribunal's order imposing duty and interest on the assessee is set aside.2. CSTA 10/2019 (Revenue's Appeal) is dismissed.3. The substantial questions of law are answered in favor of the assessee and against the Revenue.The court concluded that the appellant's appeal merits consideration and that the Customs Authority cannot take a different stand once the licensing authority has issued the licenses. The ADGFT's decision, which allowed the appellant's appeal and attained finality, is binding on the Customs Authorities.