2023 (12) TMI 388 - AT - Customs

Export obligations fulfilled but EODC delay by DGFT led to wrongful customs duty imposition on appellant

CESTAT NEW DELHI held that the appellant fulfilled export obligations and submitted requisite documents to DGFT for EODC issuance before the prescribed ... Export obligation - Export Obligation Discharge Certificate (EODC) - liability to produce EODC within prescribed time - delay by public authority not to penalise importer - natural justice - service of show cause notice - condition of notification to be strictly construedExport obligation - Export Obligation Discharge Certificate (EODC) - liability to produce EODC within prescribed time - delay by public authority not to penalise importer - Whether the appellant, having fulfilled the export obligation and submitted requisite export documents to DGFT within the prescribed period, can be held liable to pay customs duty for delay in issuance/production of the EODC by the DGFT or the Customs/Appellate authorities. - HELD THAT: - The Tribunal held that the importer's primary responsibility is to fulfil the export obligation and submit requisite documents to the competent authority; issuance of the EODC is an act of the public authority (DGFT). The record showed that the appellant submitted export details to DGFT on 01.10.2011, within the stipulated block period, and therefore satisfied the substantive export obligation. The adjudicating and appellate authorities ought to have verified the status of issuance of EODC by DGFT instead of penalising the appellant for delay in issuance by that authority. Reliance was placed on precedents and principles that a delay attributable to a public authority in issuing a certificate which the license conditions make dependent on that authority cannot be visited upon the importer; accordingly production of an EODC issued belatedly, or proof that application for EODC was submitted in time, negates the basis for recovery of duty. The Tribunal observed that the Commissioner (Appeals) wrongly ignored the EODC produced in appeal and treated it as belated, whereas the export obligation had been discharged within time and the delay in issuance was not the importer's fault. [Paras 2, 8, 12]The impugned order imposing duty was set aside and the appeal allowed, with consequential relief, because the appellant had fulfilled the export obligation and could not be penalised for DGFT's delay in issuing the EODC.Natural justice - service of show cause notice - condition of notification to be strictly construed - Whether failure of service of the show cause notice and the appellant's non-service/contentions raised on appeal required the Appellate Authority to verify service and consider those contentions before upholding the adjudication. - HELD THAT: - The Tribunal noted that the appellant contended non-receipt of the show cause notice and demonstrated communications seeking certified copy of the order-in-original; the Adjudicating Authority recorded default but the Commissioner (Appeals) failed to examine whether service had in fact occurred or to consider the EODC submitted in appeal. Principles of natural justice require that service and any contention of non-service be examined; moreover, when the appellant produced the EODC in appeal, the Appellate Authority should have taken it into account. Given these procedural deficiencies and the requirement that conditions of the notification be given proper, not punitive, effect, the appellate order could not stand. [Paras 4, 5, 8]The Commissioner (Appeals) erred in upholding the adjudication without verifying service and without considering the EODC produced in appeal; the impugned appellate order was set aside for these reasons as well.Final Conclusion: The Tribunal set aside the impugned order-in-original and the appellate confirmation, allowed the appeal and granted consequential relief, holding that the appellant satisfied the export obligation within the prescribed period and cannot be penalised for delay by the DGFT or for procedural lapses in service or consideration of the EODC. Issues Involved: 1. Whether the appellant is required to fulfill the export obligation within the time prescribed under the notification or subject to the EODC Certificate issued by the DGFT.2. Whether the delay in issuance of the EODC by the DGFT can be attributed to the appellant.3. Whether the appellant was denied natural justice due to non-receipt of the show cause notice.Summary:Issue 1: Export Obligation FulfillmentThe appellant challenged the Order-in-appeal No. 315/2019, which confirmed the Adjudicating Authority's findings. The core issue was whether the appellant needed to fulfill the export obligation within the prescribed time or subject to the EODC Certificate issued by the DGFT. The Tribunal noted that the liability of the importer is to fulfill the export obligations and submit the requisite documents to the concerned authority. If there is any delay on the part of the authority in issuing the requisite certificate, the importer cannot be held liable, and no duty liability can be imposed on him. The appellant had fulfilled the export obligations and communicated this to the DGFT on 01.10.2011, well within the stipulated period.Issue 2: Delay in Issuance of EODCThe Customs Department issued a show cause notice after the expiry of the eight-year period, which the appellant claimed not to have received. The Adjudicating Authority confirmed the show cause notice due to the appellant's failure to submit requisite documents. However, the Tribunal found that the issuance of the EODC was the responsibility of the DGFT. The appellant had fulfilled the export obligations within the prescribed time, and the delay in issuing the EODC was on the part of the DGFT. The Tribunal referred to various decisions, including those by the Telangana High Court and the Tribunal itself, which supported the view that the delay by the issuing authority should not penalize the importer.Issue 3: Denial of Natural JusticeThe appellant argued that the principle of natural justice was violated as the show cause notice was not served on him. The Commissioner (Appeals) failed to consider this contention and did not verify whether the show cause notice was actually served. The Tribunal emphasized that the appellant had fulfilled the export obligations and submitted the requisite documents to the DGFT well in time. The delay in issuing the EODC was on the part of the DGFT, and the appellant should not be penalized for it. The Tribunal set aside the impugned order and allowed the appeal with consequential relief.Conclusion:The Tribunal concluded that the appellant had fulfilled the export obligations within the prescribed time, and the delay in issuing the EODC was on the part of the DGFT. The impugned order was set aside, and the appeal was allowed with consequential relief.