CESTAT Chennai Overturns Customs Order on EPCG Machinery Import; Export Obligation Deadline Extended

The Appellate Tribunal CESTAT, Chennai set aside the impugned order concerning machinery imported under an EPCG license. The Tribunal found the customs authorities' proceedings premature as the DGFT had approved a rescheduling of the export obligation, extending the deadline to 2006. The Tribunal allowed the appeals without requiring a pre-deposit, concluding that the impugned order did not consider the revised export schedule. Consequently, the impugned order was set aside, and the appeals were allowed, providing relief to the appellants.

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Issues: Dispute over machinery imported under EPCG license, premature initiation of proceedings by customs authorities, rescheduling of export obligation by DGFT, appeal against impugned order.

The judgment by the Appellate Tribunal CESTAT, Chennai involved a dispute regarding machinery imported under an EPCG license. The license, issued in 1998, obligated the appellants to make exports according to a schedule until 2004. An order dated 31-12-2003 was passed confiscating the imported machinery and demanding duty, alleging non-satisfaction of the export schedule. The appellants had sought a reschedule of the export obligation from the DGFT authorities, which was approved, extending the export deadline to 19-11-2006.

The learned Counsel for the appellant contended that the customs authorities' proceedings were premature as they should have awaited the decision on the rescheduling request by the EPCG authorities. After examining the records and hearing the arguments, the Tribunal found that the appeals needed to be disposed of. The Tribunal decided to proceed with the appeals without requiring a pre-deposit.

The Tribunal concluded that the impugned order was premature, considering the revised export schedule approved by the DGFT. The letter from DGFT dated 23-3-2004 extended the export obligation period by two years, up to 19-11-2006, by waiving the block-wise fulfillment requirement. Consequently, the impugned order was set aside, and the appeals were allowed, granting consequential relief to the appellants.

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