TaxTMI 
TaxTMI 
2011 (3) TMI 112
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....ein it is held that the licensing authorities do not have the power to amend the licence with retrospective effect. 3) The petitioner is engaged in the business of manufacture and sale of yarn. The petitioner had applied for and obtained Export Promotion Capital Goods licence ('EPCG licence' for short) dated 14/1/1998, with obligation to export goods 6 times the CIF value of the capital goods imported. At the relevant time, there were two types of EPCG licences namely 10% basic duty EPCG licence (10% Basic duty + Nil CVD) and zero duty EPCG licence ('Nil' Basic dty + 10% CVD). The petitioner opted for zero duty EPCG licence. Para 6.3 of the Foreign Trade Policy as well as condition No.5 of Notification No.29/97 governing zero duty....
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....een allowed to be converted into 10% duty EPCG licence. Thereupon the Assistant Commissioner of Customs, EPCG issued 'No Dues' certificate and the Foreign Trade Development Officer by his communication dated 21/4/2006 informed that the petitioner has fulfilled the export obligation by exporting goods 6 times the value of the capital goods imported and that they can approach the customs authorities for release of BG/LUT executed by the petitioner. 7) In the meantime, by an order in original ('OIO') dated 27/2/2001, one of the show cause notice was adjudicated and it was held that the failure to import capital goods worth Rs.20 crores under zero duty EPCG licence was in violation of condition No.5 in Notification No.29/97 and, there....
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....its order dated 11/5/2010 held that in view of the larger Bench decision to the effect that the licensing authorities do not have the power to amend the licence retrospectively, the petitioner cannot escape duty liability on account of the conversion of licence by order dated 8/9/2003. Challenging the aforesaid order passed by the CESTAT dated 11/5/2010 as well as the larger Bench of the CESTAT dated 18/1/2008 the present petition is filed. 11) We have heard Mr. Sridharan learned counsel for the petitioner, Mr. Rana, learned senior counsel for the DGFT and Mr.Jetly, learned counsel for respondent Nos.1 to 5. 12) The basic dispute in the present case is, whether the DGFT who is the licensing authority under the Foreign Tr....
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....hows that the said conversion was allowed obviously with a view to enable the petitioner to overcome the condition No.5 of Notification No.29/97. Although the petitioner had obtained zero duty EPCG licence with a view to import capital goods worth Rs.20 crores, in view of the changed market conditions, the petitioner could not import capital goods exceeding Rs.12.5 crores. Condition No.5 in Exemption Notification No.29/97 provides that where the zero duty EPCG licence holder does not import capital goods worth Rs.20 crores then the entire duty with interest would be recoverable on the quantity of imports made under the said licence. Accordingly, the customs authorities had demanded duty with interest and penalty. 17) Once the EPCG....
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....cially when the Foreign Trade Policy and the Rules framed thereunder empower the DGFT to do the needful in deserving cases. 19) It is relevant to note that neither the DGFT nor the EPCG Committee were party respondent before the larger Bench. Since the decision to convert the licence was taken by the DGFT with the approval of the EPCG Committee (which includes customs authorities), the Commissioner of Customs / Commissioner of Central Excise were bound by the decision of the EPCG committee and could not have challenged the decision. Similarly, the larger Bench of the CESTAT could not have held behind the back of the licensing authorities that they do not have the power to amend the licence retrospectively. 20) Moreover, ....
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.... no duty, interest and penalty could be recovered from the petitioner. 22) The Jt. DGFT has filed an affidavit duly affirmed on 8/3/2011 to the effect that para 2.5 of the Foreign Trade Policy empowers the DGFT to exempt any person or class or category of persons from any provision of Foreign Trade Policy or any procedure and that the amendments carried out by the DGFT cannot be the subject matter of scrutiny and challenged by the customs authorities. In the present case, the licensing authority has held that the petitioner has fulfilled the export obligation under the 10% EPCG licence, by exporting goods 6 times the CIF value of the capital goods imported and accordingly export obligation discharge certificate has been issued on ....