TaxTMI 
TaxTMI 
2025 (12) TMI 1080
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....pted under various notifications such as Notification No.55/2003 Cus. dated 01.04.2003, 97/2004 - Cus. dated 17.09.2004, 64/2008 - Cus. dated 09.05.2008, 136/2008 Cus. dated 24.12.2008, 102/2009 Cus. dated 11.09.2009 and 22/2013 - Cus. dated 18.04.2003. 3. In the course of an investigation conducted by the Directorate of Revenue Intelligence, Chennai, the premises of the Respondent's Vendor Development, Purchase and Traffic and Customs Department were searched and statement were recorded from the Respondent's personnel. It appears that the Respondent had imported capital goods by availing benefit of concessional rate of duty under EPCG Scheme, in terms of the Customs Notifications mentioned above. The benefits were available subject to fulfilment of certain conditions (pre-import and post-import) as laid down in the respective notifications. It appears that the imported capital goods have been diverted to the vendor's premises that are not authorised for installation in the condition list attached to the EPCG authorisation on the strength of which the imports were made. 4. Earlier, in 1999, the DRI had initiated an investigation into the exemption claimed for capital g....
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.... Hundred and Sixty Three only) on the goods imported by M/s. HMIL vide Bill of Entry No. 436678 dt. 04.11.2007 under EPCG license no 430004769 dt 16.03.2007 and found in use with the vendor, M/s. Ragam Metal India P Ltd. under Sec 28(2) along with interest under Sec. 28AB of the Customs Act, 1962; (ii). I confiscate the impugned goods valued at Rs.5,73,50,976/- found in the premises of the 16 vendors (mentioned at Para 34.1), (for which no approvals have yet been obtained from DGFT) under Sec. 111(0) of the Customs Act, 1962. However, I give an option to M/s. HMIL to redeem the same under Sec. 125 (1) of the Customs Act, 1962 on a payment of fine of Rs. 10,00,000/- (Rupees Ten Lakhs only). (iii). I also impose a penalty of Rs.3,00,000/- (Rupees Three Lakhs only) and Rs.2,00,000/-(Rupees Two Lakhs only) on M/s HMIL each under Sec. 112 (a) and 112 (b) of the Customs Act, 1962, respectively. (iv). I drop the charges levelled in the SCN in respect of the remaining vendors and corresponding licenses where post-facto approval have been obtained from DGFT. (v) I impose a penalty of Rs. 1,00,000/- (Rupees One Lakh only) each under Sec. 112 (a) and 112 (b....
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....al in nature would constitute the violation of the notification. However, the customs notification does not make a distinction between the procedural and substantial conditions to be complied with. c. The argument that the capital goods were shifted under intimation to central excise authorities is evidence that they knew the provisions of the customs notification and the EPCG policy. When the importer has complied with such provisions of properly documenting the movement of capital goods, there is no justification for having not requested DGFT to include the respective Tier I / Tier II suppliers as supporting manufacturers well in advance of such movement. d. Even if the capital goods were moved under Central Excise Challans the relevant customs notification only provides for installation of capital goods in the premises of supporting manufacturers approved by the DGFT/RA and lack of prior approval indicates breach of condition of the notification and for the above reasons warrant that the capital goods be liable for confiscation under section 111(o) and the Respondent liable to penalty under Section 112. e. Penalty on the Respondent under Section 114 A ....
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....have all been simultaneously/subsequently approved by the DGFT. b) Based on the same, the demand of differential duty has been dropped in the Impugned Order. These minutes and letters are available at pages 124 to 167 of the Cross Objections filed by the Respondent. Such post facto approval means amendment to the EPCG Authorisations, to include the job workers' premises as the place of installation of capital goods. Such post facto approval or amendment will date back to the date of the respective EPCG Authorizations. c) On the question of whether approval granted by Committees (Norms Committee, Policy Relaxation Committee or EPCG Committee) functioning under the DGFT would bind the Revenue Department or not, the Courts and Tribunals have held in favour of the assessee in the following decisions: i. Bhilwara Spinners Ltd. v. Union of India, 2011 (267) E.LT. 49 (Bom.) ii. Dewas Soya Ltd. v. Union of India, 2009 (235) E.LT. 821 (Del) affirmed by the Delhi High Court in Union of India v. Dewas Soya Ltd, 2011 (270) E.LT. 17 (Del) iii. M/s. Ashok Leyland limited & Ors. v. CC, 2023 (12) TMI 8 - CESTAT CHENNAI iv. Regency Ceramics ....
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....of moving the capital goods to the job worker premises has been regularised by the EPCG Committee and therefore no duty is payable. The transaction between the vendors and the Respondent being nature of job work transactions can be viewed as where the parties have followed the procedure envisaged in Rule 6 of Cenvat Credit Rules 2017. g) The capital goods imported under the EPCG Scheme is subject to actual user condition. Actual user means an actual user who may be either industrial or non-industrial and the actual user (industrial) means a person who utilises imported goods for manufacturing in his own industrial unit or manufacturing for his own use in another unit including a jobbing unit. Therefore, the use of the capital goods by the job worker in the jobbing unit where they have undertaken the job work does not violate the actual user condition. Once installing the capital goods in the job worker premises, does not violate the foreign trade policy, it does not violate the conditions of the Customs notification. h) When the capital goods have been used by the job worker for the benefit of the EPCG Authorisation Holder for further manufacture of automobile com....
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....d CCE, 2021 (378) ELT 446 (Tri. - Mumbai) to contend that the extended period of limitation cannot be invoked when there is a specific finding that there has been no wilful misstatement or suppression of facts. m) that penalties are not imposable under Section 112 and 114 AA. The appeal filed by the department does not state as to which particulars or declarations made by the Respondent were false or incorrect and therefore penalty is not imposable under Section 114 AA of the Act on the Respondent. Penalty is not imposable on the employees of the Respondent since no differential duty is payable. n) Penalty is also not to be imposed on the employees since the department has not filed separate appeals against the employees as required under Rule 6 A of the CESTAT procedure Rule and therefore the impugned order in so far as it pertains to the employees of the company must be treated to have attained finality. Reliance is placed on the decisions in CC v. Chokhani Silk Mills Pvt. Ltd., 2013 (290) E.L.T. 710 (Tri. - Mumbai), CC v. Gautam Adani, 2014 (309) E.L.T. 324 (Tri. - Ahmd.),Mohan Govindasami Andal Alagar v. CC(A), 2021 (377) E.L.T. 29 (Ker.) and CCE v. Arih....
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.... export obligation failing which to pay the duty involved along with interest. It is thereafter held that as per para 5.3/5.4 of the FTP for the relevant period, the import of the capital goods under the EPCG Scheme shall be subject to the Actual User Condition till the export obligation is completed. 14. Finding thus, the Adjudicating Authority has gone on to examine the requirement of endorsement of the supporting manufacturers in the corresponding authorisations. Examining the validity of the allegation that the capital goods have been moved to the premises of the vendors without valid endorsements/issue of amendment sheets in the respective licences, it has been found that in respect of ten vendors, the names were already endorsed in eight EPCG licences prior to issue of the subject notice and furnishing details of these licences, it has been held that the demand of duty in respect of these cases do not survive on merits. Thereafter, taking cognizance of the requests dated 22.02.2010, 17.08.2011 and 07.05.2014 of the Respondent for post facto recognition of vendors by the EPCG Committee as well as the reply thereto and tabulating the number of vendors/licences involved in....
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....ittee at different times for post facto approval and for inclusion of the supporting manufacturers in their EPCG licences and the EPCG Committee has accorded permission. 32.1.9. I find from the conditions of the notifications governing the EPCG scheme, relevant provisions of the policy and the decision of the EPCG Committee that the main purpose of the scheme is to ensure fulfilment of the export obligation and in case of non-fulfilment of the same to recover the duty foregone with interest. The conditions of endorsement of the vendors name, installation certificate etc. are all mechanisms aimed to ensure that the substantial condition of export obligation is fulfilled. The EPCG Committee has observed that when the substantial condition of export obligation has been fulfilled, the alleged violation of obtaining prior permission before installation of the machinery in the premises of the vendors is only a technical lapse and has accorded post-facto permission. I find that thee EPCG Committee being the competent authority has ratified the inclusion of vendors by way of according post facto approval and the importer has not suppressed the very same issues which has been raise....
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....approval, it evidently cements the Respondent's contention that the substantial conditions of the EPCG Scheme are that the export obligation is completed and the capital goods satisfy the actual user condition till such time of completion of export obligation. The remaining conditions of the notifications are only guardrails to ensure the compliance of the main condition of fulfilment of the export obligation. 20. It is seen that in the decision in Bhilwara Spinners Ltd v UOI, 2011 (267) ELT 49 (Bom), the Hon'ble High Court has held that once the licensing authority has found that the licence conditions have been fulfilled, it would not be open to the customs authorities to contend that the imports under the licence are contrary to law and take action against the licence holder. At this juncture, it is also profitable to notice the observations of a coordinate bench of this Tribunal in the decision in Goldfinch Hotels Pvt Ltd v. Commr of Cus. (Acc & Exports),Mumbai, 2015 (328) ELT 282 (Tri-Mumbai), wherein it has been stated as under: "25. It is settled law as held by the Hon'ble Supreme Court in Vadilal Chemicals Ltd. v. State of Andhra Pradesh, 2005 (192) E.L.T. 33 (S....
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....med that while formulating the Foreign Trade Policy even the Departments of Revenue must have been duly consulted. Therefore, with regard to the language used in Para 2.4 of the Foreign Trade Policy, it is the view expressed by the Ministry of Commerce, which must be taken to be that voice. Para 2.4 of the FTP reads thus - "Procedure 2.4 DGFT may, specify procedure to be followed for an exporter or importer or by any licensing or any other competent authority for purpose of implementing provisions of FT (D&R) Act, the Rules and the Orders made thereunder and FTP. Such procedures shall be published by means of a Public Notice, and may, in like manner, be amended from time to time." It is evident from the above provision of the FTP issued by Central Government by way of a Notification in the Official Gazette, that an exporter or importer or any licensing or any other competent authority (which shall necessarily include the officers of Ministry of Finance/Customs Authorities), would be bound by the procedure specified by DGFT for implementing the provisions of FT (D&R) Act, the Rules, the Orders made thereunder and FTP, published by means of a Public Notice. Thus all....
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....tion that in the absence of a notification issued by the Customs as a consequence of Exts. P17 and P18, the benefit cannot be claimed at this stage. However, having regard to the fact that the Government of India have issued Exts. P17 and P18, do not think it will be reasonable to require the petitioner to wait until any notification is issued by the Customs Department to get the benefit. Therefore, there is no substance in this objection." (emphasis supplied) 21. We are therefore of the considered view that the Adjudicating Authority, upon finding that in the subject case there is no allegation of non-fulfilment of export obligation and further the Respondent has stated that they have fulfilled the export obligation and have applied to the RLAs for EODC and all the impugned capital goods continue to remain in rightful ownership of the Respondent despite being installed in various vendor's premises; has thereafter rightly held that when there is no allegation about non-fulfilment of the two substantial conditions of the Notifications/EPCG Scheme viz., completion of the export obligation and non-alienation of the capital goods, the demand for duty cannot be legally susta....
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....e time limit in the licences to comply with the substantive conditions of fulfilment of the export obligation having not expired and further taking note of the fact that the Respondent has produced evidence of having submitted the proof of completion of export obligation before the Regional Licensing Authority has held that it is premature to make demands in respect of the capital goods in the premises of the 12 vendors as listed in the impugned order. Out of the four vendors where the Respondent has failed to obtain approval for the correct premises and where the goods were found to be in use, in respect of one vendor pertaining to the EPCG License No.430004769 dated 16.03.2007 finding that the export obligation period having expired, the adjudicating authority has held the duty demand sustainable. In respect of capital goods valued at Rs.5,73,50,978/- imported under the licences and available at the time of investigation in the premises of 16 vendors which were not authorised in those licences the adjudicating authority has finding that no prohibition is involved in respect of the goods in issue held that Section 111(d) is not applicable but nevertheless found them liable for con....