TaxTMI 
TaxTMI 
2023 (7) TMI 1665
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....08-Cus. dated 09.05.2008, apart from interest under Section 28AB ibid., penalty under Section 112(a) ibid. on both the appellants and also appropriation of Bank Guarantee executed by the appellant towards the demands so raised. 2.1. Facts are not in dispute: the appellant had imported four cars under the EPCG Scheme, namely:- (i) DL1ZZ 0198 [BMW] (ii) DL1ZZ 0185 [BMW] (iii) DL1ZZ 0432 [BMW] (iv) DL1ZZ 0209 [Honda CR-V] The vehicles at Sl. Nos. (i) to (iii) above were cleared through Chennai Sea Port and the vehicle at Sl. No. (iv) through Mumbai Sea Port. 2.2. It appears that the importation purportedly was made for use in Tour/Transport/Hotel Related Services of foreign nationals. 2.3. It appears that the Revenue received specific information that the above vehicles were being used as private vehicles for the personal use of the Managing Director of the appellant i.e., the second appellant herein, and his family members, and were not being used for commercial purposes to earn foreign currency for the fulfillment of export obligation, as stipulated in the EPCG Authorization and Scheme. 2.4. Based on the above specific information, ....
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....ded, it appeared to the officials that all the imported vehicles were being used exclusively as private vehicles for personal purposes of the second appellant and his family members, in violation of the "T" Board Registration. (vii) The appellant did not produce documents to support that the said vehicles were used as tourist taxi to earn foreign exchange. (viii) In respect of the car at Sl. No. (i), they appear to have noticed that the insurance was made as a private car. (ix) The cars were imported under the EPCG Authorization by mis-declaring that the same were required to provide comfortable road travel services to the high-class guests of any other country in India to earn foreign exchange. (x) The appellant never used the above vehicles for the intended purposes to earn foreign exchange. (xi) The total amount of Customs Duty saved in respect of the above vehicles by misusing the EPCG scheme was Rs. 96,11,113/- for the vehicles imported through Chennai Port and Rs. 9,41,922/- for the other vehicle imported through Mumbai Port. (xii) The above has resulted in violation of the Foreign Trade (Development and Regulation) Act, 1....
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....ven a requirement under the FTP or any Customs Notification as to maintenance of logbooks or any other record for the use of cars imported under the EPCG Scheme. (e) EPCG Scheme permits the import of cars to hotels for such purposes and it is nowhere stipulated that the same are to be used for providing travel agency or tour operator services to guests. (f) The export obligations are to be fulfilled by providing hotel services only and the fact that the cars were available for providing the service, if required, is only a value addition to the service, which has direct nexus with foreign exchange earning. (g) The following judicial precedents of co-ordinate CESTAT Benches have been relied by the appellant in its reply: i. Indian Hotel Co. Ltd. v. Commissioner of C.Ex., Mumbai, 2006 (204) E.L.T. 439 (Tri. - Mum.) ii. Enjay Hotels P. Ltd. v. Commissioner of Customs, Sheva, 2000 (119) E.L.T. 108 (Tri.) iii. Commissioner of Customs, Mumbai v. Hotel Leela Venture Ltd., 2003 (158) E.L.T. 777 (Tri. - Mum.) iv. Commissioner of Customs., New Delhi v. Som Dutt Builders Ltd. [2009 (236) E.L.T. 478 (Tri. - Del.)] v. Air Tr....
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....ed under the EPCG Scheme in 2007 and another one in 2009. A sample Condition Sheet is placed in the appeal memorandum at page 63, the relevant portion of which is reproduced for the sake of convenience and reads as under:- "Office of Jt. Director General of Foreign Trade A-WING, Indraprastha Bhawan, I.P. Estate, New Delhi-110 002 ____________________________________________________________________________ CONDITION SHEET ANNEXURE - A Attached to EPCG Authorisation No. 0530143860 Dated: 11.06.2007 1. This Authorisation has been issued under Chapter 5 of Foreign Trade Policy 2004-2009 and carries an export obligation to export to GCA countries and realise the export proceeds in freely convertible currency and is subject to the conditions as laid down in Chapter 5 of Foreign Trade Policy and Procedures (Vol. I) 2004-2009 and/or The authorisation holder shall supply goods to categories carried under para 8.2 (a), (b), (d), (f), (g) and (j) of the policy. 2. The firm is under obligation to Export Item S. No. ITCHS Code Export Item Name 1 87032291 Hotel related services. CAR MODEL : BMW 730Ls Diesel....
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....cations referred to supra. 14.1. In the case of M/s. M. Far Hotels Ltd. (supra), decided by the co-ordinate Bangalore Bench of the CESTAT, the following ratio emerge:- "11. On going through that letter it is seen that the DRI requested the DGFT to issue clarification saying that export earnings through alternate products and services like room rent, income from sale of food beverage should not be considered towards the discharge of Export obligation. This point has not been accepted by the DGFT as it would be very difficult to show export earnings separately because of the use of the vehicle. In the overall package of the hotel, the use of the vehicle also would be included. In other words, the package includes very many things including the use of the vehicle. From the clarification, it is clear that it is not very necessary that the appellants have to show the amount of foreign exchange earned because of the exclusive use of the car, due to practical difficulties. The appellants also have stated that in many cases, they may allow the use of the vehicle as complement to Tourists. In those cases, they may not be billing them separately. And it would be very difficult an....
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....#39;travel agency'. They were required to fulfill the export obligation of about Rs. 2.06 crores. (b) The appellant claimed that they have fulfilled the export obligation and the claim was accepted by DGFT authorities vide communication dated 18-3-04. (c) Subsequently on 16-8-04, DRI seized the cars and show cause notice dated 15-2-05 was issued proposing confiscation of the cars and proposing to recover duty foregone on the ground that the conditions of notification as well as conditions of EPCG licence had been violated. The show cause notice makes reference to communication sent to DGFT authorities by the Customs authorities for violation of EXIM policy. (d) In pursuance of the show cause notice, Commissioner confiscated the two cars and allowed the same to be redeemed on payment of fine of Rs. 6 lakhs; demanded duty of Rs. 46,76,805/- along with interest. He also imposed a penalty of Rs. 15 lakhs on the appellant-company and penalty of Rs. 5 lakhs on the Managing Director of the appellant-company who is the other appellant before us." 15.2. After hearing the rival contentions, the CESTAT has held as under:- "6.4 We agree with the conte....
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.... (203) E.L.T. 202 (Del.) was concerned with almost identical issue namely use of imported cars by travel agency. This Court was concerned with the same Interpretation and in the process decided as to how such imported cars could be of more use to a travel agency for fulfilling the EPCG Scheme. Perusal of the Judgment would show that the Revenue on the one hand and the assessee on the other hand had come out with extreme positions in support of their respective submissions, whereas, the assessee argued that the only answer for the assessee was to show fulfillment of export obligation and whether in this process, imported goods were used or not was not relevant. 5. On the other hand, submission of the Revenue was that the export obligation should be fulfilled with the direct use of the imported items namely cars in the said case. Both the interpretations were not accepted, the Court took a balance of view by interpreting the EPCG policy in the following manner:- "The true position appears to us to be that while capital goods may or may not be capable of generating convertible foreign exchange by their independent use as is the position in the case of the lift in a h....
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.... The very fact that there is foreign exchange earned is itself sufficient to hold so. When the appellant submitted its application for EODC on 22.03.2011 by contending that it has fulfilled the export obligations, the concerned authority namely, the Office of the DGFT, appears to have duly acknowledged both the fact of the appellant fulfilling the conditions as well as the requesting for discharge certificate. This fact has not been specifically denied by the Revenue anywhere in the impugned order. 17.1. We find that in the case of M/s. Goldfinch Hotels Pvt. Ltd. v. Commr. of Cus. (Acc & Exports), Mumbai, 2015 (328) E.L.T. 282 (Tri. - Mum.), the co-ordinate Mumbai Bench was seized of a more or less identical situation wherein cars imported under EPCG were confiscated and the Revenue had also relied upon statements including that of drivers. But however, the Ld. Bench has observed that:- * There was no condition stipulating to park the vehicle imported under the EPCG Scheme at a particular place and mere parking of the vehicle at a particular place could not be considered as a violation of actual user condition. * No conclusive inference could be drawn from the ....