TaxTMI 
TaxTMI 
2025 (8) TMI 509
X X X X Extracts X X X X
X X X X Extracts X X X X
....er section 125(2) of the Customs Act 1962 [the Customs Act]. Penalty under section 112(a) of the Customs Act has also been imposed on the appellant. 2. Customs Appeal No. 55310 of 2013 has been filed by D. Bhandari, Director of the appellant against that part of the order dated 10.01.2013 passed by the Commissioner (Preventive) that imposes a penalty upon him under section 112(a) of the Customs Act. 3. Customs Appeal No. 55311 of 2013 has been filed by Sunil Satija, Director of the appellant against that part of the order dated 10.01.2013 passed by the Commissioner (Preventive) that imposes a penalty upon him under section 112(a) of the Customs Act. 4. The appellant is inter-alia engaged in the business of running hotels. The appellant imported two BMW cars and claimed benefit of Notification No. 97/2004-Cus. dated 17.09.2014 [the Notification] in terms of EPCG Scheme. The cars were imported for the purpose of rendering services to foreign guests staying at Hotel Park Plaza, Gurgaon, owned by the appellant at the relevant time, and earn foreign exchange through the services rendered with the help of such cars. 5. The appellant claims that the cars were used in....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Act, 1988. As per the provisions of this Act, a car used for commercial purpose is required to be registered as a 'TAXI' and not as a private vehicle. The circular merely reiterated and clarified what is obvious and was issued sequel to rampant misuse to cars imported under the EPCG scheme. The fact that the circular required registration of vehicles imported prior to its issue also, for tourist purposes, shows that the circular merely stated what is obvious. xxxxxxxx 6.3 xxxxxxxxxxx. Even if, as contended by the party, there may be no concept of separate billing/invoices required to be maintained by the importer in respect of cars, there has to be some record in the form of log books / vouchers / duty slips etc. to show usage of cars by the service providers for the purpose these were imported as mandated by the para 5.15. (In fact, even otherwise as a control mechanism, organizations do maintain some such records to keep tab on vehicles, drivers etc.) Further, absence of any evidence documentary or otherwise showing the use of imported cars for the hotel gustes is also confirmed by the statements of Rahul Siddhu, Assistant Manager, Front Office, Park P....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er documents evidencing that the two BMW cars (1) HR26AC9119 and (2) HR26AC8822 imported by M/s Bestech Hospitalities Pvt Ltd were being used for hotel services/purposes and whether he asked for or insisted for the documents as mentioned above) From the fact that no documents about the usage of cars were shown/provided by M/s Bestech Hospitality even to their chartered engineer even when he asked for the same, only inference is that they had not made any use of the vehicles for the hotel or related service hence no records were there. xxxxxxxxxxxxxxx Therefore, in view of above statements and findings, the defence of the party that the assumptions and surmises that the vehicles were never used for the purpose they were imported for, merely on the basis of missing log books, are baseless, does not hold good and cannot be accepted. As already explained &discussed above, the allegation of the non use of the cars for the intended purpose/use of the cars for personal & private purpose by the directors is based on evidence of statements of independent persons like driver, hotel staff and chartered engineer etc. The statements of employees discussed abo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....i Gupta and Ms. Ashwani Bhatia, made the following submissions: (i) Undisputedly, the export obligation has been fulfilled by the appellant within the time granted by the DGFT. Once the EODC has been received, the duty demand is not sustainable. In this connection reliance has been placed on this following decisions: (a) Titan Medical Systems Pvt. Ltd. vs. Collector of Customs, New Delhi-2003 (151) E.L.T. 254 (S.C.); (b) Design Co. & Ors vs. Union of India & Ors.-W.P.(C) 14477/2022 decided on 22.11.2024; (c) M/s. Super Cassettes Industries Ltd. vs. Commissioner of Customs, New Delh-Customs Appeal No. 296 of 2006 dated 03.01.2025; (d) Devanshi Textiles vs. Commissioner of Customs, Jaipur-Customs Appeal No. 163 of 2012 decided on 17.12.2024; and (e) Bestech Hospitalities Pvt. Ltd. vs. Commissioner of Customs (Import), New Delhi-Customs Appeal No. 50232 of 2020 decided on 25.08.2021 (ii) The appellant has neither voilated any condition of Notification nor violated any provisions of EPCG Scheme. The appellant is, therefore, entitled to the benefit of the Notification; (iii) The statements made under section 108 of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the cars were not used for the intended purpose. 15. The relevant portion of the Notification is reproduced below: "GENERAL EXEMPTION NO. 64 Effective rates of duty for imports under Export Promotion Capital Goods Scheme (EPCG).-In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods specified in the Table annexed hereto, from,- (i) so much of the duty of customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) as is in excess of the amount calculated at the rate of five per cent ad valorem, and (ii) the whole of the additional duty leviable thereon under section 3 of the said Customs Tariff Act, when specifically claimed by the importer 2. The exemption under this notification shall be subject to the fallowing conditions, namely:- (1) that the goods imported are covered by a valid licence or a valid authorization issued under the Export Promotion Capital Goods Scheme in terms of Chapter 5 of the Foreign Trad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d golf tourism sectors in the current and preceding three licensing years is Rs. 1.5 crores or more. The 'duty saved' amount on all EPCG Authorisations issued in a licensing year for import of motor cars, sports utility vehicles/ all purpose vehicles shall not exceed 50% of the average foreign exchange earnings from the hotel, travel & tourism and golf tourism sectors in the preceding three licensing years. However, the parts of motor cars, sports utility vehicles/all purpose vehicles such as chassis etc. cannot be imported under the EPCG Scheme." 17. The appellant was granted EPCG Licence dated 07.02.2006 issued by the Foreign Trade Development Officer and the same is reproduced below: "To Bestech Hospitalities Pvt. Ltd. 1/2873, Ram Nagar, Loni Road Shahdara Delhi 110032 Sub: Grant of License (EPCG Scheme Concessional duty 5%) Sir/Madam, You are requested to acknowledge the receipt of license with following details: S cheme: EPCG Scheme Concessional duty 5% License No: 0530140397 Dated : 07.02.2006 Duty Saved Value (Rs.): 7,437,792.00 To avoid any difficulty in operation of the li....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aintained average level of export as per condition sheet of the Licence. (K. LALITA) FOREIGN TRADE DEVELOPMENT OFFICER" 19. The issue that arises for consideration in these appeals is whether the demand could be confirmed with consequent penalties for violation of the conditions of the Notification, when the EODC was issued in favour of the appellant evidencing fulfilment of export obligation and it has not been cancelled till date. 20. The first submission that has been advanced by the learned counsel for the appellant is that since that export obligation had been fulfilled by the appellant within the time granted by the DGFT and EODC was issued and received by the appellant, duty could not have been demanded from the appellant when proceedings had not been initiated by DGFT against the appellant for cancelling the EODC. The contention, therefore, that has been advanced is that once the DGFT authorities exercised their jurisdiction and satisfied themselves that the export obligation was fulfilled by the appellant within the stipulated time and redeemed the bank guarantee, the customs department does not have any jurisdiction to sit in judgment over the EODC issued by t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssification of any item for import/export in the ITC (HS) which would be final and binding. The FTP undoubtedly stands imbued with statutory authority by virtue of Section 5 of the FTDR Act. 105. Of equal importance are the FTDR Rules and which too incorporate provisions conferring an authority on the Director General or the licensing authority to suspend or cancel a license, certificate, scrip or any instrument bestowing financial or fiscal benefits. Once it is held that the MEIS would clearly qualify as an instrument bestowing financial or fiscal benefits, the power to cancel or suspend would be liable to be recognized as being exercisable by the Director General on the licensing authority alone. It would thus be wholly impermissible for the customs authorities to either ignore the MEIS certificate or deprive a holder thereof of benefits that could be claimed under that scheme absent any adjudication or declaration of invalidity being rendered by the DGFT in exercise of powers conferred by either Rules 8, 9 or 10 of the FTDR Rules. The customs authorities cannot be recognised to have the power or the authority to either question or go behind an instrument issued und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ken by the DGFT. An action for recovery of benefits claimed and availed would have to necessarily be preceded by the competent authority under the FTDR Act having found that the certificate or scrip had been illegally obtained. We have already held that the reference to a proper officer in Section 28AAA is for the limited purpose of ensuring that a certificate wrongly obtained under the Customs Act could also be evaluated on parameters specified in that provision. However, the said stipulation cannot be construed as conferring authority on the proper officer to question the validity of a certificate or scrip referable to the FTDR Act." (emphasis supplied) 24. It is not in dispute that EODC had been issued to the appellant by DGFT on 30.06.2008. It is also not in dispute that the said EODC has not been cancelled till date by DGFT. 25. In Titan Medical Systems the Supreme Court observed that once a licence was issued and it was not questioned by the licencing authority, the customs authorities cannot refuse exemption on an allegation that there was mis-representation. The Supreme Court further observed that if there was any mis-representation, it was for the licencing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oned are then recorded under these provisions. It is these statements which are referred to either in section 9D of the Central Excise Act or in section 138B of the Customs Act. A bare perusal of sub-section (1) of these two sections makes it evident that the statement recorded before the concerned Officer during the course of any inquiry or proceeding shall be relevant for the purpose of proving the truth of the facts which it contains only when the person who made the statement is examined as a witness before the Court and such Court is of the opinion that having regard to the circumstances of the case, the statement should be admitted in evidence, in the interests of justice, except where the person who tendered the statement is dead or cannot be found. In view of the provisions of sub-section (2) of section 9D of the Central Excise Act or sub-section (2) of section 138B of the Customs Act, the provisions of sub-section (1) of these two Acts shall apply to any proceedings under the Central Excise Act or the Customs Act as they apply in relation to proceedings before a Court. What, therefore, follows is that a person who makes a statement during the course of an inquiry has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....an be admitted in evidence." (emphasis supplied) 31. In Drolia Electrosteel, the Tribunal had also while examining the provisions of section 9D of the Central Excise Act held: "13. Of the above, the 35 statements of various persons recorded under the Central Excise Act will be relevant to the proceedings only as per section 9D which lays down the procedure to be followed to make them relevant and the exceptions to such procedure. ***** 14. Evidently, the statements will be relevant under certain circumstances and these are given in clauses (a) and (b) of subsection (1). There is no assertion by either side that the circumstances indicated in (a) existed in the case. It leaves us with (b) which requires the court or the adjudicating authority to first examine the person who made the statement and form an opinion that having regard to the circumstances of the case, the statement should be admitted in evidence. Of course, the party adversely affected by the statement will have to be given an opportunity to cross examine the person who made the statement but that comes only after the statement is, in the first place, after examination by the adjudicating authority,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a) of Section 9D(1) exists, clause (b) of Section 9D(1) comes into operation. The said clause prescribes a specific procedure to be followed before the statement can be admitted in evidence. Under this procedure, two steps are required to be followed by the adjudicating authority, under clause (b) of Section 9D(1), viz. (i) the person who made the statement has to first be examined as a witness in the case before the adjudicating authority, and (ii) the person who made the statement has to first be examined as a witness in the case before the adjudicating authority, and 17. There is no justification for jettisoning this procedure, statutorily prescribed by plenary Parliamentary legislation for admitting, into evidence, a statement recorded before the Gazetted Central Excise Officer, which does not suffer from the handicaps contemplated by clause (a) of Section 9D(1) of the Act. The use of the word "shall" in Section 9D(1), makes it clear that, the provisions contemplated in the sub-section are mandatory. Indeed, as they pertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory. 18. The ra....