2023 (8) TMI 1004 - AT - Customs

Tribunal Upholds Vehicle Registration Timeline, Dismisses Customs Appeal

The Tribunal found that the respondent did not violate the conditions of the notification by registering the vehicle as a tourist vehicle within the ... EPCG Scheme - denial of benefit of N/N. 55/2003 - Demand of differential duty - denial of benefit of condition of the notification in as much as the car was not registered as tourist vehicle for a substantial period and also that the foreign exchange was received from various other services and not by use of the car - non-maintenance of proper vehicle movement records and the vehicle travel journey documents showed only very less amount collected from using the vehicle for travel purpose - HELD THAT:- In the case of COMMISSIONER OF CUSTOMS (AIR CARGO EXPORT) VERSUS HOTEL EXCELSIOR LTD. [2016 (5) TMI 1418 - DELHI HIGH COURT] similar issue was considered and the Hon’ble High Court, Delhi observed the Court is unable to disagree with the reasoning of the CESTAT that as long as foreign exchange is earned by the hotel and the imported cars are being used, there cannot said to be a violation of any statutory requirement. Thus, the impugned order before does not call for any interference. The same is sustained. Appeals filed by the department are dismissed. Issues Involved:1. Whether the respondent violated the conditions of the notification by not registering the vehicle as a tourist vehicle.2. Whether the foreign exchange earned was fully accounted for the purpose of obtaining the Export Obligation Discharge Certificate (EODC).3. Whether the Customs department can question the EODC issued by JDGFT without prior consultation.Summary:Issue 1: Registration of Vehicle as Tourist VehicleThe department alleged that the respondent violated Notification No. 55/2003 by not registering the imported Nissan X Trail Car as a tourist vehicle initially. The respondent registered the vehicle as a private vehicle and later re-registered it as a tourist vehicle upon instructions from JDGFT. The Tribunal noted that the relevant policy circular issued by DGFT on 07/05/2008 allowed vehicles to be registered as tourist vehicles by 31/08/2008 if EODC had not been obtained by 30/06/2008. The respondent complied with this requirement before the issuance of EODC, thus no violation of the notification was found.Issue 2: Foreign Exchange EarningsThe department contended that the foreign exchange earnings used to fulfill the export obligation were not solely from the use of the imported car but also from other services like hotel and tourism business. The Tribunal referred to previous decisions, including the respondent's own case involving a Mercedes Benz car, where it was held that foreign exchange earned by the hotel and through incidental services could be considered towards the export obligation. The Tribunal concluded that the respondent's earnings met the requirements of the EPCG scheme and there was no need for the earnings to be exclusively from the use of the car.Issue 3: Questioning the EODC Issued by JDGFTThe Tribunal observed that once the JDGFT issued the EODC, the Customs department could not question it without prior consultation with JDGFT. The Tribunal cited various decisions, including the case of Narang International Hotels Pvt. Ltd., which emphasized that the licensing authority's satisfaction regarding the fulfillment of export obligations should be accepted by the Customs authorities.Conclusion:The Tribunal found that the respondent complied with the conditions of the notification regarding the registration of the vehicle and the accounting of foreign exchange earnings. The Customs department's appeal was dismissed, and the order of the Commissioner (Appeals) was upheld, confirming that the demand for differential duty and penalties was not sustainable. The Tribunal emphasized the finality of the EODC issued by JDGFT and the lack of any statutory requirement that foreign exchange must be exclusively earned by using the imported vehicle.