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<h1>EPCG license holder wins appeal against confiscation of capital goods for alleged non-fulfillment of export obligations</h1> <h3>M/s. Ashok Leyland Limited, M/s. Renault Nissan Automotive India Private Ltd., M/s Gestamp Automotive Chennai Private Limited, M/s Myoung Shin India Automotive Private Limited, M/s Daejoo Automotive India Private Limited, M/s MS Global India Automotive Private Limited, M/s Magna Automotive India Private Limited and M/s Caparo Engineering India Ltd. Versus Commissioner of Customs, Chennai-IV, Chennai</h3> M/s. Ashok Leyland Limited, M/s. Renault Nissan Automotive India Private Ltd., M/s Gestamp Automotive Chennai Private Limited, M/s Myoung Shin India ... Issues Involved:1. Non-fulfillment of Export Obligation (EO).2. Diversion of Capital Goods.3. Non-availability of Capital Goods.4. Demand of Duty and Interest.5. Confiscation and Penalties.Summary:Non-fulfillment of Export Obligation (EO):The primary issue was that M/s. Ashok Leyland Nissan Vehicles Ltd. (ALNVL) failed to achieve the minimum 50% export obligation in respect of 23 EPCG authorizations within the block period of 1st to 4th year. The DGCEI-CZU registered a case of violation of the EPCG Scheme, leading to a Show Cause Notice (SCN) dated 15.09.2016 proposing to demand differential duty along with interest and penalties. The EPCG Committee later granted an extension of the export obligation period for 14 licenses, and the Policy Relaxation Committee condoned procedural irregularities for 12 licenses, allowing the appellant to fulfill their export obligations.Diversion of Capital Goods:The investigation revealed that ALNVL had indulged in the diversion of capital goods to unauthorized premises under nine EPCG authorizations. The Policy Relaxation Committee condoned these procedural irregularities, regularizing the installation of capital goods in different locations other than those endorsed in the authorizations.Non-availability of Capital Goods:Some of the capital goods imported under five EPCG authorizations and installed at the premises of M/s RNAIPL were found to be destroyed/consumed by wear and tear and were not available for further production. The Policy Relaxation Committee condoned these procedural lapses as well.Demand of Duty and Interest:The adjudicating authority passed an order demanding customs duty and interest for non-fulfillment of export obligations and procedural lapses. The appellants argued that they had complied with the conditions imposed by the EPCG Committee and Policy Relaxation Committee by paying the composition fees and fulfilling the export obligations within the extended period.Confiscation and Penalties:The adjudicating authority ordered the confiscation of seized capital goods and imposed penalties on ALNVL and supporting manufacturers. The Tribunal noted that the competent authority had granted extensions and condoned procedural lapses, and thus, the penalties imposed on supporting manufacturers were set aside. The matter was remanded to the adjudicating authority to consider the decisions of the EPCG and Policy Relaxation Committees and the compliance made by the appellants.Conclusion:The Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for reconsideration, directing them to consider the decisions passed by the Committees, the compliances made by the appellants, and the fulfillment of export obligations, and to pass a fresh order within three months. The appeals filed by the supporting manufacturers were allowed.