TaxTMI 
TaxTMI 
2026 (9) TMI 1943
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....isation/ license at the port of import specified therein, non-production of EPCG authorisation/ license for debit and non-execution of Bond in prescribed form with specified surety or security, is procedural lapse? (ii) Whether the Hon'ble CESTAT is right in facts and circumstances of the case and in law in holding that benefit of exemption Notification No. 16/2015-Cus. dated 01.04.2015 for Export Promotion Capital Goods License was admissible to the Respondent. (iii) Whether in the facts and circumstances of the case, and in law, the Hon'ble CESTAT is right in allowing the appeal of the Respondent, with consequential relief? 3. The brief facts of the case are as under : 3.1. The respondent-assessee is engaged in the manufacture of the Drug Intermediate falling under Chapters 28 and 29 of the first schedule to Central Excise Tariff Act, 1985 (for short 'the Tariff Act'). The assessee was also granted permission to function as 100% Export Orientated Unit (for short 'the EOU') by the Development Commissioner of Kandla Special Economic Zone (for short 'the KASEZ'), Kandla. The assessee, later on, applied to exit from the EOU scheme to the Development Co....
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....tom duty was also computed amounting to Rs. 6,48,65,591/-under Section 28(1) of the Act, 1962 along with interest under Section 28AA of the Act and penalty of Rs. 60,00,000/- under Section 112(a)(ii) of the Act for the acts of omissions and commissions. 3.4. The Adjudicating Authority also levied the penalty of Rs. 1,00,000/- under Section 117 of the Act, 1962 for not following the procedure/conditions for utilising the EPCG license. 3.5. Being aggrieved, the assessee preferred an Appeal before the CESTAT, who vide the impugned order, allowed the Appeal by observing as under: "4. We have carefully considered the submission made by both the sides and perused the records. We find that as per the facts of the case, the appellant was 100% Export Orient Unit Manufactured bulk drugs ever since 2003, there was no dispute that the appellant have fulfilled the condition of Net Foreign Exchange as positive therefore as far as status of 100% EOU there was no dispute. However, the appellant on 01.07.2015, filed a Form-ANF-6D in terms of Para 6.18 of the Foreign Trade Policy, 2015-20 (FTP) for exit from the EOU. On 27.10.2015, the appellant approached the Development Commissioner....
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....h the port of Import mentioned therein (ii) the license is not made available for the debit of the capital goods. (iii) non-filing of undertaking as required under Customs Notification No. 16/2015. 4.3 We find that there is no dispute that the appellant have not cleared goods from the port of import under EPCG scheme whereas the goods initially imported were cleared under exemption Notification No. 52/2003-CUS which is eligible to 100% EOU, thereafter the goods were brought to the unit of the appellant for installation and use in the manufacture of goods. It is only at the time of debonding the appellant have proposed to exit from EOU to EPCG scheme and after all the compliances, the appellant was allowed to exist from EOU there is no dispute that the appellant were in possession of EPCG license. 4.4 As regard the contention of the adjudicating authority that the license was not registered with the port of import as mention in the EPCG license, we find that since the goods were not cleared from the port of import under ECG scheme whereas the goods were debonded while exiting from EOU there is no question of registering the license with the port o....
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....undertaking for discharging the duty if there is any short fall even after the debonding of the unit. Therefore, even if the undertaking is not in a particular format but once the appellant have undertaken to discharge duty liability if any arise in future, the undertaking given is sufficient and the same is in compliance to the undertaking as required under custom Notification No. 16/2015. From the above, it can be seen that after the whole compliance for exiting EOU to EPCG scheme, the exit was allowed by the Development Commissioner as well as Custom and Central Excise officer. Moreover, as discussed above almost all the compliances as required under Notification No. 16/2015-Cus have been made in one or other form. Therefore, in our view there is no non compliance of any condition of the Notification No. 16/2015-Cus, even if there is any lapse, it is a procedural lapse and for which the substantial benefit of EPCG scheme cannot be denied to the appellant when there is no allegation of non-fulfillment of export obligation." 4.1. Learned advocate Mr. C.B. Gupta appearing for the appellant-Revenue submitted that admittedly, the assessee did not comply with the condition of the N....
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....ed to submit certain documents for obtaining the final exit order. Therefore, the question, which has been considered by the CESTAT is that from the date of debonding, till the final exit order passed by the Development Commissioner, the assessee was required to obtain the EPCG license from the port of import for availing the benefit of Notification No. 16/2015-CUS. The relevant conditions prescribed in exemption notification No. 16/2015-CUS read as under : "2. The exemption under this notification shall be subject to the following conditions, namely:- (1) that the goods imported are covered by a valid authorisation issued under the Export Promotion Capital Goods (EPCG) Scheme in terms of Chapter 5 of the Foreign Trade Policy permitting import of goods at zero customs duty; (2) that the authorisation is registered at the port of import specified in the said authorisation and the goods, which are specified in the Table 1 annexed hereto, are imported within validity of the said authorisation and the said authorisation is produced for debit by the proper officer of customs at the time of clearance: Provided that the goods imported should not fall un....
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....facts of the case, when these conditions are fulfilled and not in dispute as well as the assessee has undertaken to fulfill the export obligation under the EPCG scheme, then it cannot be said that there is any lapse of non-registration of the license at the port of import, as the same is merely a procedural requirement and breach of such condition, if any, cannot be considered for denial of benefits of the EPCG Scheme to the assessee. 8. Moreover, it is not in dispute that the license was not in existence for debit of the duties for claiming the exemption and the Department could have called upon the assessee for the details of the license for the debit of the capital goods, imported by the assessee for the purpose of installing the same for manufacturing under the EPCG Scheme. In the facts of the case, while exiting from the EOU Scheme, the assessee had submitted the EPCG license to the Central Excise and Customs Department and thereafter only, the provisional No Objection Certificate was issued by the Development Commissioner and final No Objection Certificate was also issued subsequently, after submission of the required documents and therefore, we are of the opinion that the....