EPCG scheme appellant wins as delayed Export Obligation Discharge Certificate was DGFT's fault not theirs

CESTAT NEW DELHI ruled in favor of appellant in EPCG scheme case involving failure to submit Export Obligation Discharge Certificate (EODC). Appellant had fulfilled 100% export obligations but EODC was issued with delay by DGFT on 16.02.2016, prior to adjudicating authority's order dated 26.02.2016. Tribunal held that delay in EODC issuance was attributable to DGFT, not appellant. Since EODC confirmed complete fulfillment of export obligations, appellant could not be denied benefits. Matter remanded to adjudicating authority for fresh decision considering the validly issued EODC. Appeal allowed by way of remand.

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Issues involved:
The case involves the challenge to an Order-in-Appeal affirming an Order-in-Original related to the import of capital goods under an EPCG license, specifically concerning the fulfillment of Export Obligations as per a customs notification.

Details of the Judgment:

Issue 1: Importer's Obligation to Fulfill Export Obligations
The appellant imported capital goods under an EPCG license subject to fulfilling Export Obligations as per the customs notification. The appellant was required to produce evidence of fulfilling Export Obligations within specified time frames, failing which duties were recoverable along with interest.

Issue 2: Adjudication and Penalties
A show cause notice was issued to the appellant for failing to submit evidence of Export Obligations. The Order-in-Original confirmed duty payment for non-compliance, along with penalties under the Customs Act. The appellant challenged the order, citing lack of communication from the DGFT.

Issue 3: Delay in Issuance of EODC
The delay in issuing the Export Obligation Discharge Certificate (EODC) by the DGFT was a key contention. The appellant sought an extension to fulfill Export Obligations, which was eventually granted. The EODC confirming 100% fulfillment was issued after the Order-in-Original but before the impugned order.

Issue 4: Appellate Tribunal's Finding
The Tribunal noted that the delay in issuing the EODC was not attributable to the appellant. Referring to relevant provisions and past decisions, the Tribunal held that once EODC is issued showing compliance, the appellant cannot be deemed to have violated the conditions of the notification.

Conclusion:
Considering the EODC confirming full compliance with Export Obligations, the Tribunal set aside the impugned order and remanded the matter for fresh determination. The Tribunal emphasized that denial of benefits to the appellant after fulfilling obligations would serve no purpose.

Separate Judgment:
The judgment was delivered by MS. BINU TAMTA, MEMBER (JUDICIAL) AND MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) on 15th January, 2024.

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