AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1460
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....gn exchange through the services rendered with the help of such cars. Since the appellant was rendering the services as a 'tour operator' and a 'travel agency', the export obligation was fulfilled by rendering various services related to tourism and travelling. On completion of their export obligation, the appellant applied for grant of Export Obligation Discharge Certificate [EODC] before the Directorate General of Foreign Trade [DGFT]. The DGFT issued the EODC for License No.1 and 2 on 16.09.2004 and 30.08.2005 respectively. However, in respect to License No. 3, the appellant filed an application for issuance of EODC on 16.02.2005 along with all the documentary proofs evidencing fulfilment of export obligation. 3. Meanwhile, the Directorate of Revenue Intelligence [DRI] initiated investigations regarding the import of Cars and hence the said EODC was kept pending by DGFT. The DRI seized the cars under Section 110 of the Customs Act. The appellant filed the Writ Petition (C) 6. 23162/2005 before the Delhi High Court, and the court ordered the release of the cars on providing bank guarantees. 4. On completion of investigations, Show Cause Notice dated 31.08.2006 was issue....
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....Titan Medical Systems Pvt. Ltd. vs. Collector of Customs, New Delhi [2003 (151) ELT 254 (SC)], wherein the Hon'ble Supreme Court held that once an advance license had been issued and not questioned by the licensing authority, the customs authorities cannot refuse exemption on an allegation that there was mis-representation. The Supreme Court held that it was for the licensing authorities who were responsible to take steps in this regard. Consequently, in so far as the liabilities under License No. 1 and 2 are concerned, the decision of the licensing authorities was final and binding. 5.3. Learned counsel further added that the appellant had neither violated any condition of Notification No. 49/2000 and Notification No. 44/2002 nor violated any provision under EPCG Scheme. He stated that the requirement was actual use of the capital goods imported under EPCG Scheme to render services to earn foreign exchange, and it was not the requirement that services rendered through the exclusive use of capital goods imported would only be considered for considering fulfilment of export obligation. Further, as per Para 5.1 of Foreign Trade Policy ('FTP') 2002-2007, EPCG scheme per....
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....stoms vs. Air Travel Bureau Limited [2010 (260) ELT 78 (Del.)], and the subsequent appeal was dismissed by the Supreme Court [2011 (268) ELT A110 (SC),] wherein it was held as follows:- "6.3 We find that the Customs authorities have taken up the matter with the DGFT expressing their views that there is violation of EXIM Policy provisions and it appears that the said view has not been accepted by them. According to the appellant, not only the DGFT had not accepted the view of the Customs Department but they have also redeemed the EPCG licence after certifying that they have fulfilled the export obligation as prescribed. 6.4 We agree with the contention of the learned DR that the Customs authorities are empowered to look into the compliance of the conditions of the notification independently. However we, in the present case, find that the notification has a link to provisions of the EXIM policy and the understanding of the DGFT authorities on the said provisions cannot be brushed aside without valid reasons 6.5. Further, we have not been shown that the imported vehicles have been used for any purpose other than those related to travel and tour as stipulated....
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....ellants at the time of clearance of the goods. In fact, the appellant was under a bona fide belief that the export obligation has to be discharged by the foreign exchange earned out of the services of travel agent provided by the appellant. This bonafide understanding of the appellant was amply supported by the clarifications dated 29.11.2005 and 27.12.2006 issued by the DGFT, and the dropping of the proceedings vide DGFT's order dated 29.11.2006 and the issuance of the EODC by the DGFT to the appellant. He prayed that the appeal may be allowed. 6. Learned authorized representative for the department reiterated the discussions and findings of the impugned order. Learned authorized representative submitted that the customs authorities have the statutory authority to verify compliance of the conditions of an exemption notification, irrespective of DGFT certification, as held in the decision in Sheshank Sea Foods Private Limited and reaffirmed the Surya Samudra decision of the Tribunal. Misuse of imported goods and non-attribution of foreign exchange earnings to the use of the Cars amount to breach of conditions, justifying duty recovery, confiscation, and penalties. Learned au....
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.... Section 111(o) in respect thereof. It is true that the terms of the said Exemption Notification were made part of the appellants licences and, in that sense, a breach of the terms of the said Exemption Notification is also a breach of the terms of the license, entitling the licensing authority to investigate. But the breach is not only of the terms of the license; it is also a breach of the condition in the Exemption Notification upon which the appellants obtained exemption from payment of Customs duty and, therefore, the terms of Section 111(o) enable the Customs authorities to investigate." 6.2 Learned authorized representative submitted that the department's case was legally and factually established, and supported by admissible confessions, corroborated by documentary evidence. Hence, the appeals filed by the appellants were devoid of merit and deserve to be dismissed in full. 7. We have heard the learned counsel for the appellant and the learned authorized representative for the department and perused the records. 8. At the outset, we will consider the primary argument of the learned authorized representative that the Tribunal's decision in Surya Samudra Holiday ....
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....in violation of the EPCG license conditions. The Sub Regional Transport office, Trivandrum issued a No objection certificate for transfer of the vehicle to Bangalore, and subsequently was registered as a private vehicle. In the instant case, the appellant imported the three cars for rendering 'tour and travel related services and earn foreign exchange through the services rendered with the help of such cars. The cars were registered as private vehicles as per the reports received from the Transport registering authorities in New Delhi and Gurgaon. In this regard, we note that unlike the Surya Samudra case where the car had been transferred to Bangalore by the importer, in the instant case, the cars were available with the appellant. It has been argued before us that the said three cars were registered as private vehicles, and not as commercial vehicles. In this context, we observe that DGFT vide Notification No. 11 (RE-2006)/2004-2009 dated 14.06.2006 inserted the condition under Para 5.1 of FTP requiring vehicles imported under EPCG scheme to be registered either as a tourist vehicle enabling the vehicle to be used for-tourist purpose. The said notification is reproduced herei....
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....ant's premises. It is an admitted fact that the 3 cars were imported for tour and travel related services. The export obligation was fulfilled by rendering various services related to tourism and travelling. In this context, we note that the learned counsel for the appellant submitted that the appellant obtained the EPCG licenses for import of cars under the EPCG scheme for rendering the services relating to 'tours and travel. This fact was duly made clear in the application for the EPCG licenses. Terms and conditions sheet of EPCG Licences also mentioned "Product to be Exported-Tour and Travel". There is no dispute over the entitlement of 'tour operators'/Travel Agents' to import cars as capital goods under the prevailing EPCG scheme. Therefore, the appellant had correctly obtained the EPCG licenses for import of cars for rendering the services relating to 'tours and travel. 12. We now address the core allegation as to whether the export obligation had to be fulfilled only by the usage of the imported cars. In this context, we note that the appellant earned foreign exchange by rendering the services which are similar to the tourism industry viz., GSA comm....
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....stered as tourist and commercial vehicles and foreign exchange earnings after such conversion alone should be considered towards fulfilment of EO. (ii) Export earnings through alternate products and services, like room rent, income from sale of food, beverages etc. should not be considered towards discharge of EO. 3. As regards 2(i) above mandatory requirement of registration of cars imported under EPCG as Tourist/Commercial vehicles has been notified on 14.6.2006 and included as a part of the Foreign Trade Policy 2004-09. Prior to this date, there was no such stipulation in the Foreign Trade Policy Therefore, foreign exchange earnings by use of these vehicles not registered as Commercial/Tourist vehicles cannot be denied the benefits of considering the same towards fulfilment / discharge of EO so long as no other misuse/transfer of such a vehicle/registration of such vehicle in the name other than the licence holder is reported. As regards the mandatory registration of these vehicles as Tourist/Commercial vehicles prior to this date, there appears to be violation of Motor Vehicles Act on account of use of private registered vehicles for commercial purposes. Howev....
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....y of export of goods manufactured by his supporting manufacturer having one or more manufacturing units. The amended para 5.4(i) of the EXIM Policy allowed an alternative, viz, the export obligation could be fulfilled by export of other goods manufactured or service provided by the licence holding company or group company. It is this part of the amended para 5.4(1) of the EXIM Policy, which has been specifically referred to by both sides." Here it has to be determined as to whether the 'export obligation' of the assessee in respect of the car imported by them under the EPCG Scheme could be fulfilled by way of foreign exchange earnings from the entire hotel business. I have repeatedly referred to the definition of 'export obligation' given under clause (ii) of Explanation (4) to Notification 44/2002-Cus. There are umpteen number of judicial decisions holding that the substantive conditions of an exemption notification should be strictly construed. That the importer under EPCG Scheme should discharge his export obligation in respect of the imported capital goods within the prescribed period is one such condition attached to the above notification and the same has to....
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....on is that the car should be installed in the premises of the importer. Contextually, I have to consider the rival submissions with reference to "installation" of car. One must have regard to what the apex court observed in the case of TISCO v. Collector [2005 (181) E.L.T. 311 (S.C.)] - "As the words "instal" or "installed" go to show, much would depend upon the context in which the expression is used in a particular statute and no generalisation can be made." Insofar as a vehicle is concerned, its installation, to my mind, would mean its registration under the Motor Vehicles Act and the Rules framed thereunder. This car was registered at Trivandrum and, therefore, it can be said that it was installed there. The assessee produced a certificate from the Chartered Engineer who certified that the car was installed as per the Registration Certificate. It can, therefore, be said that the condition with regard to installation of capital goods was satisfied by the assessee. But such installation was not enough inasmuch as actual user was fundamental to the EPCG scheme (as observed by the Hon'ble High Court in Interglobe Enterprises Ltd. v. Union of India [2006 (203) E.L.T. 202 (Del.)] and....
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....n of the Tribunal, on which the Ld AR has placed reliance in the instant case. The term "determinative factor" in a judgment refers to an element, circumstance, or condition that has a decisive influence or directly controls the outcome of the case before the court. It essentially means the cause or consideration that is pivotal in deciding the legal issue or dispute; in other words, it is the "but for" or "because of" factor whose existence or absence conclusively settles the point at issue. It is a crucial element, influence, or circumstance that decisively shapes or controls the nature, outcome, or direction of a situation, decision, or event. The Courts have interpreted the term "determinative" particularly in the context of contracts, as referring to something that can be brought to an end or terminated, especially at the unilateral will of a party without reference to breach or other circumstances. In legal terminology, "determinative" also means sufficient to decide something, such as a question of fact or law. 18. In the instant case, the holding of the EODCs was determinative of completing their export obligations towards the import of the three cars. We note that copie....