comm appeal company camry

7/30/2019 Comm Appeal Company Camry

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BEFORE

THE HONOURABLE COMMISSIONER OF CUSTOMS (APPEALS)

Jawaharlal Nehru Custom House, Nhava Sheva, Uran, Raigad, Maharashtra

Appeal No. .of 2010

INDEX

Sr. No. Documents Page No.

1. Appeal in CA-1 1- 272. Stay Application 28-303. Annexure-I (Copy of OIO Dated 02.11.2010) 31-474. Annexure-II ( Copy of SCN Dated

03.12.2008)48-58

5. Annexure-IIIa. Copy of DGFT Circular dated 7.5.2008b. Copy of EPCG Licencec. Copy of relevant B/Ed. Registration Certificate of Vehiclee. Export Obligation Discharge Certificate.f. Letter dated 26.04.08 and 02.05.08

addressed to Customs by the appellantg. Statement dated 27.06.2007 of

Directorh. Copy of case Law: The Commissioner

of Customs Versus Air Travel BureauLtd, AIT-2010-364-HC

59-79

6. Authorisation to Advocate 80

M/s Travel Planners Pvt. Ltd., - AppellantA-244, Mahipalpur Extension,N.H 8, New-Delhi - 110037

V.

Commissioner of Customs - Respondent

JNCH, Nhava Sheva, Raigad, Maharashtra

Arising out of

Order in Original No. 66/2010 dated 02.11.2010 passed by Joint Commissioner ofCustoms (Export), JNCH, Nhava Sheva, Tal-Uran, Raigad


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FORM NO. C.A.-1

[Refer Section 128 of The Customs Act, 1962 read with Rule 3 of The Customs

(Appeal) Rules, 1982]

BEFORE


Jawaharlal Nehru Custom House, Sheva, Tal-Uran, Raigad, Maharashtra

Appeal No. .of 2010

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M/s Travel Planners Pvt. Ltd, - AppellantA-244, Mahipalpur Extension,N.H 8, New-Delhi - 110037

V.

Commissioner of Customs - RespondentJNCH, Nhava Sheva, Raigad, Maharashtra

Arising out of

Order in Original No. 66/2010 dated 02.11.2010 passed by Joint Commissioner ofCustoms (Export), JNCH, Nhava Sheva, Tal-Uran, Raigad


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Most respectfully showeth,

BRIEF FACTS

1. We M/s. Travel Planners Pvt. Ltd (hereinafter referred as appellant), A 244,

Mahipalpur Extension, NH 8, New Delhi are providing various services such

as travel, ticketing, tourism, logistic Services etc to our clients located in India

as well as abroad. We also earn significant foreign exchange by providing our

various services to clients located outside India.

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2. Name and address of the Appellant M/s Travel Planners Pvt. Ltd,A-244, Mahipalpur Extension,N.H 8, New-Delhi - 110037

3. Designation and address of the officer passingthe decision or order appealed against and the

date of the decision or order.

Joint Commissioner of Customs(Export), Mumbai-II, JNCH,

Nhava Sheva, Tal- Uran,District- Raigad, Maharashtra-400707

Date of Order 02.11.20104. Date of communication of a copy of the order

appealed against.09.11.2010

5. Address to which the notices may be sent tothe appellant.

1. M/s Travel Planners Pvt.Ltd,

A-244, Mahipalpur

Extension, N.H 8, New-Delhi 110037

2. Pramod Kumar Rai

Athena Law Associates

808, L&T Flats, Sec 18B,

Dwarka, New Delhi-110078

6. Whether duty or penalty or both is deposited;if not, Whether any application for dispensing

with such deposit has been made. (A copy ofthe challan under which the deposit is madeshall be furnished).

Duty amount of Rs.7, 62,548/-has been already deposited.

A separate stay application isbeing moved for the penalty.

6A. Whether the appellant wishes to be heard inperson

Yes

7. Reliefs claimed in the A

ppeal As per Prayer Clause


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2. The appellant applied to the DGFT, New Delhi for import of cars under EPCG

scheme, which were to be used as capital goods for providing our basket of

services. The said application is a relied upon document at Sr. No. 1 in the

SCN. It is noteworthy that the various forms designed for EPCG Schemes

were basically designed for manufacturing units as EPCG scheme was

originally available only for manufacturing units and services sector was

added at a later date and forms were not revised. Thus the existing forms

needed to be used mutatis mutandis for import of capital goods under EPCG

for services sector as well.

3. In the said application the appellant made true disclosure that they are

service providers and the end product to be produced and exported will be

services. After being satisfied Joint DGFT, New Delhi has issued EPCG

license No. 0530134097 dated 01.05.2003. The conditions attached to

license are also not specific to services sector, rather they are pre printed

standard conditions primarily meant for manufacturing units, which were

annexed with the license. Thus all these conditions need to be interpreted

with suitable adaptations for services.

4. For capital goods imported under EPCG scheme by a manufacturing unit

following points are note worthy.

I. There is no condition that the export obligation must be fulfilled out

of exported goods directly manufactured on the particular machine

which is imported under EPCG Scheme.

II. There is no condition that capital goods imported under EPCG

scheme must be exclusively used for manufacture of export goods.

In fact capital goods can be used for manufacture of all kinds of

goods whether DTA or Export Goods.

III. The export obligation should be fulfilled by the export of goods

(may not be necessarily manufactured on the machine imported

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under EPCG scheme) by the manufacturing units/business

organizations, who has imported capital goods under EPCG

scheme.

IV. The capital goods are imported with actual user condition. Capital

Goods cannot be disposed until the export obligation is fulfilled.

5. When above conditions are interpreted in reference to services sector, the

export obligation can be fulfilled by providing various services, which may not

be directly rendered with the help of car, imported under EPCG Scheme. The

car imported under EPCG scheme can be used for services which are

consumed 100% within India i.e. for a service other than export services. The

car is imported with actual user condition and it cannot be disposed off until

export obligation is fulfilled.

6. In terms of the aforesaid EPCG license issued to the appellant, the appellant

imported one Toyota Camry ACV 30R motor car under B/E No. 01885 dated

25.07.2003 and cleared it through Nhava Sheva Port, Mumbai. The aforesaid

car, imported under EPCG license was used in the business of Appellant

Company, in which foreign exchange has been earned by providing services

to clients.

7. The conditions of the said EPCG license as given in annexure A of the

license are as under.

I. That we will realize export proceeds in freely convertible currency,

which we have done.

II. That we should have earned foreign exchange of US $ 126650.95

within a period of 8 years which we have exceeded in a period of

around 4 years and obtained export obligation discharge certificate.

There was no condition that foreign exchange should be earned

directly by the use of capital goods. We are in services sector

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where the car has been used and the foreign exchange has been

earned by rendering services.

III. The import was to be effected with actual user condition which we

did and till date the car is in our possession. We have not sold the

car even after obtaining EODC.

8. The appellant fulfilled all the conditions of the said EPCG license and after

achieving the required foreign exchange earning applied to DGFT for

discharge of Export obligation under the said license. The DGFT, New Delhi

after verification and scrutiny of all our records found that all the conditions

laid down in the said EPCG license have been satisfied by us and issued

EODC on 29.05.2007. Thus we fulfilled export obligation within a period of

less than 4 years against the available period of 8 years under the license.

9. Now after expiry of more than a year from the date of EODC and more than

five years from the date of import, the revenue alleges that the EODC

obtained by the appellant is based on the mis-statement. In this backdrop a

show cause notice dated 03.12.2008 has been issued to the appellant by the

honourable Addl. Commissioner of customs as amended of corrigendum of

March 2009, calling upon to show cause to Commissioner of Customs

(Exports), JNCH, Nhava Sheva as to why:

a. The Toyota Camry bearing registration No. DL-9-CG-4200, Chassis

No. JTDBE38K700233942 and Engine No. 2AZ1190622 having

Assessable value Rs, 7,47,400/- imported vide B/E No. 01885 dated

25.07.2003 and cleared at Nhava Sheva Port which was imported

against EPCG License No. 0530134097 by paying 5% Customs duty

only as per EPCG Scheme read with the customs notification No.

55/2003-Cus dated 01.04.2003 as amended should not be confiscated

under section 111(d) and 111(o) of the Customs Act, 1962 read with

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section 46 of the Act ibid and rules 11 and 14 of the Foreign Trade

(Regulation) Rules, 1993.

b. The customs duty amounting to Rs. 7,62,548/- for which exemption

from payment was availed fraudulently against EPCG License No.

0530134097 read with customs notification No. 55/2003 dated

01.04.2003 as amended during customs clearance of the above said

Toyota Camry ACV 30R bearing registration No. DL-9-CG-4200 should

not be demanded and recovered with interest from them in terms of

section 28 of the Customs Act, 1962 read with section 28AB of the Act

ibid read with condition of the EPCG license No. 0530134097 and

customs notification No. 55/2003 dated 01.03.2003.

c. Penalty should not be imposed on us under section 112 and/or

114A of the Customs Act, 1962 on account of omission and

commission rendering the said vehicle, i.e. Toyota Camry ACV 30R

bearing registration No. DL-9-CG-4200 liable to confiscation under

section 111(d) and 111(o) of the Customs Act, 1962.

10. The appellant submitted a detailed reply in response to the above SCN. A

synopsis of submissions was also submitted subsequently. However, the

adjudicating authority without discussing the various submissions made by

the appellant has agreed with the allegations made in the SCN and has

passed the impugned order wherein he has

a. Confirmed the entire duty demand

b. Imposed penalty equal to the differential duty involved

c. Confiscated the car and has imposed a redemption fine of

Rs 5 lakhs as the car has been provisionally released.

GROUNDS OF APPEAL

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11. The Order in Original No. 66/2010 dated 02.11.2010 passed by Joint

Commissioner of Customs (Export), Jawaharlal Nehru Custom House,

Nhava Sheva, Tal-Uran, Raigad is not correct, legal and proper on the

grounds detailed herein below which are in alternative and without prejudice

to each other.

Violation of Principle of natural justice: Non reasoned order

12. It is a cardinal principle of natural justice that the authorities must pass a

reasoned order. The learned Joint Commissioner has passed a non reasoned

order. He has not discussed our various submissions in true spirit and most

importantly the following ones.

a. The demand is time barred.

b. EPCG obligation already stands dischargedby issuance of EODC

by DGFT on 29.05.2007.

c. Under the law at relevant times there was no requirement to get the

vehicle registered as a taxi as per DGFT Circular dated 07.05.2008.

d. There is no requirement under the EPCG scheme to have a one to

one correlation between the foreign exchange earnings and usage of

car.

e. The period of export obligation given under the scheme is yet not

over.

The demand is time barred

13. Once the EODC is issued, the cars become free and there are no conditions

to be fulfilled in respect of the car. The present demand is issued on

03.12.2008 in respect of the import which took place on 25.07.2003 and for

which EODC was issued on 29.05.2007, after expiry of more than a year from

the date of EODC and more than five years from the date of import. No

demand can be raised under section 28 of customs act 1962 beyond a period

of six months unless there is fraud, suppression etc on the part of importer. In

the present case the present demand has been issued after more than a year

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from the date of EODC and thus is time barred. For the sake of clarity

relevant portion of section 28 is reproduced below.

SECTION 28. Notice for payment of duties, interest

etc. (1) When any duty has not been levied or hasbeen short-levied or erroneously refunded, or when any

interest payable has not been paid, part paid or erroneously

refunded, the proper officer may, -

(a) in the case of any import made by any individual for

his personal use or by Government or by any educational,

research or charitable institution or hospital, within one year;

(b) in any other case, within six months,

from the relevant date, serve notice on the person

chargeable with the duty or interest which has not been

levied or charged or which has been so short-levied or part

paid or to whom the refund has erroneously been made,

requiring him to show cause why he should not pay the

amount specified in the notice :

Provided that where any duty has not been levied or has

been short-levied or the interest has not been charged or

has been part paid or the duty or interest has been

erroneously refunded by reason ofcollusion or any willful

mis-statement or suppression of facts by the importer or

the exporter or the agent or employee of the importer or

exporter, the provisions of this sub-section shall have effect

as if for the words one year and six months, the words

five years were substituted.

14.At no point of time we have stated that vehicle will be used as taxi or it will be

registered as a tourist vehicle. There was no mis declaration on our part at

any point of time. Our import of car was not for personal use rather it was for

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the use in business activity and there is no suppression on our part. Therefore

the demand is certainly hit by limitation clause.

15. The finding of Joint commissioner in this regard is erroneous as he has not

categorically stated what was willfully mis declared by us. Appellant has never

submitted that vehicle shall be used as a taxi. It was submitted that vehicle

shall be used by M/s Travel Planner which is a commercial concern with profit

motive and in fact vehicle has been used by Travel Planner. The vehicle has

not been used by any individual in his personal capacity rather it has been

used in business which has earned foreign exchange. His conclusion that

cars have not been used in commercial capacity is based on mere fact that

cars have not been used as taxi and therefore this finding is erroneous. The

statement of director which has been referred in finding clearly says that car

has been used in commercial business. The conclusion drawn in para 4.12

that vehicle has been used as personal conveyance is arbitrary and without

any evidence and it does not follow from the discussion of JC incorporated in

previous paragraphs, more importantly para 4.8. There is no finding that

vehicle has been used for any purpose other than business.

16.Further he has concluded that we have redeemed the EPCG license by mis

statement and fraudulent submission of records. We submit that firstly he has

no jurisdiction to deal with this issue and DGFT alone can decide whether the

license has been redeemed properly or not. Secondly his conclusions are not

based on any factual finding rather they are hollow conclusions devoid of any

kind of supporting evidence.

The EPCG obligation stands fulfilled

17. The allegation of Customs is that we have not fulfilled conditions of EPCG

license. The appellant submits that Export Obligation Discharge Certificate

No. 508516 dated 29.05.2007 issued by DGFT is a proof that we have fulfilled

all conditions of the aforesaid EPCG license. The DGFT is final authority

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when it comes to interpretation of EXIM policy and various schemes such as

EPCG under EXIM policy. Thus once the EODC is issued by DGFT, Customs

cannot raise any objection on our fulfillment of export obligation under the

said EPCG scheme.

Still earning Foreign Exchange

18.We were required to fulfill export obligation within a period of 8 years time

limit which expires in 2011, however we fulfilled our obligation in 2007 itself.

We are still earning foreign exchange by providing our services and we have

not availed any export incentive in respect of our export earnings in past other

than the benefit of said EPCG scheme and currently also we are not availing

any export benefit. The car imported under the said EPCG Scheme is still

under use in our business where we are currently earning foreign exchange.

Therefore until 2011, no action can be taken against us for non fulfillment of

export obligation under the said EPCG license.

The Appellant has made true declaration.

19. The Appellant has made true declaration to Joint DGFT, New Delhi in their

application for obtaining EPCG license. The departments allegation that the

appellant has made wrong declaration is false and baseless. The declarations

made by the appellant are true. The appellant has made following

declarations in their application to the Joint DGFT, New Delhi.

a. The appellant has declared that they are service providers.

It is established beyond dispute that the appellant is a service

provider. We are engaged in travel, tourism and logistic business.

We have sold tickets to foreigners and NRIs and earned foreign

exchange in tourism at the relevant times. We have provided

package tours/services to our clients and earned foreign exchange.

We have provided travel related logistic support to film units who

came from other countries to India and earned foreign exchange.

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The appellant is also registered with service tax department as a

Travel Agent/service provider. Therefore the declaration of the

appellant that he is service provider is very much right and there is

no dispute about it.

b. The appellant has declared that the end product to be produced

and exported will be services.

The appellant in its application for obtaining EPCG license has

declared that the product to be produced and exported shall be

services. It is already explained in the above para that the appellant

is service provider and it earns foreign exchange by providing

services to foreigners and NRIs. The said car imported under said

EPCG license is not registered in the name of any individual but in

the name of appellant (Travel Planners Pvt. Ltd.) and has been

used in the business of the appellants company, which is in

services sector, to earn foreign exchange.

c. The appellant undertook to abide by the provisions of the Foreign

Trade (Development & Regulation) Act, 1992, the Rules and

Orders there under, the Export Import Policy and the Hand Book of

Procedures.

It is pertinent to mention that the appellant has not violated any law

or provisions of the Foreign Trade (Development & Regulation) Act,

1992, the Rules and Orders there under, the Export Import Policy

and the Hand Book of Procedures. The DGFT is fully satisfied with

appellants compliance of Foreign Trade (Development &

Regulation) Act, 1992, the Rules and Orders there under, the

Export Import Policy and the Hand Book of Procedures and that is

why DGFT has issued Export Obligation Discharge Certificate

(EODC) to the appellant.

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The Requirement of registration of vehicle as a tourist vehicle came in 2008

20. There are no provisions under Foreign Trade (Development & Regulation)

Act, 1992 and the Rules and Orders made there under, which requires that

the imported car under EPCG Scheme should be registered as a taxi or

tourist vehicle, at the time of import of the said car. Therefore by registering

the imported car in the name of Appellant Company as a non taxi vehicle, the

appellant company has not violated any law.

21.The requirement of registration of vehicles imported under EPCG Scheme as

a taxi/tourist vehicle has been introduced on 7.5.2008 vide the policy circular

No. 7 under Foreign Trade Policy ( Para 5.1 of FTP) , which is reproduced

below

Policy Circular No. 7 (RE-2008)/2004-2009 Dated 7/5/2008

Import of Motor Car etc. under EPCG Scheme - ( Para 5.1 of FTP)

Attention is invited to Para 5.1 of Foreign Trade Policy wherein Import of Motor

Cars, Sports Utility Vehicles / all purpose vehicles are allowed only to Hotels,

Travel Agents, Tour Operators or Tour Transport Operators and Companies

owning / operating Golf Resorts.

2. In order to ensure proper and intended use of above vehicles under EPCG

Scheme, following course of action would be taken by EPCG authorization

holder, Regional Authorities of DGFT and Custom Authorities in addition toexisting conditions:

(a) Customs authorities will endorse in Bill of Entry while clearing such vehicles

that such vehicles have to be registered as a vehicle for tourist purpose only.

This would make purpose of import of vehicles absolutely clear and would also

facilitate registration.

(b) In all past cases where Export Obligation Discharge Certificate (EODC) has

not been obtained by 30-06-2008 and where vehicles were not registered as

Tourist Vehicles, EPCG authorization holders will get them registered as Tourist

Vehicles, by 31-08-2008. Regional Authorities of DGFT will monitor and ensure

compliance.

3. This issues with the approval of DGFT.

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22.The aforesaid policy circular has come into effect from 07/05/08. The

language of the circular makes it very clear that from 07/05/08 onwards it has

been mandatory for the vehicles imported under EPCG Scheme to be

registered as a vehicle for tourist purpose. The said circular is not with

retrospective effect rather with a prospective effect.

23.Para 2 (b) of the circular gives clarification regarding past cases where Export

Obligation Discharge Certificate (EODC) has not been obtained by 30-06-

2008 and where vehicles were not registered as Tourist Vehicles. The

circular requires in such cases that EPCG authorization holders with non taxi

numbers registration shall get the vehicle registered as Tourist Vehicles, by

31-08-2008. It is pertinent to mention that the DGFT itself acknowledges that

prior to 7/05/08 it was not mandatory or binding on the EPCG holder to get

the vehicle imported under EPCG scheme registered as a tourist vehicle or as

a taxi.

24.By going through the said circular , specially para 2 (b), it becomes very clear

that the said circular requires registration as Tourist Vehicles of the vehicles

imported under EPCG scheme in two conditions

a. Import of Motor Cars, Sports Utility Vehicles / all purpose vehicles

under EPCG Scheme from 07/05/08 onwards.

b. Where Export Obligation Discharge Certificate (EODC) has not

been obtained by 30-06-2008 and where vehicles were not

registered as Tourist Vehicles.

25. We are not covered under aforesaid categories. The appellant has not

imported the car under EPCG Scheme after 7/05/08, therefore the appellant

is not covered under first category. Further the appellant has obtained Export

Obligation Discharge Certificate (EODC) on 29.05.2007 i.e. much prior to

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30/06/2008 and thus the appellant is not required to get the vehicle registered

as a tourist vehicle under second category also.

26. It is noteworthy that there is no irregularity in cases where the vehicles were

not registered as tourist vehicles and where EODC was issued prior to

30.6.2008. It is also noteworthy that there is no irregularity in cases where the

vehicles were not registered as tourist vehicles and where no EODC was

issued provided the vehicles get registered as tourist vehicles prior to

31.8.2008. The cases where EODC was issued prior to 30.6.2008 were

unaffected by this circular. Thus the only natural corollary of this circular is

that the cases where EODC has been issued prior to 30/6/2008 and where

vehicles were not registered as tourist vehicles, there is no irregularity and

EODC issued by DGFT is perfectly in order. Therefore the departments

allegation that by not registering the vehicle as tourist vehicle the appellant

has violated the provisions of the Foreign Trade (Development & Regulation)

Act, 1992, the Rules and Orders made there under is false and baseless.

DGFT is final authority to decide eligibility under EPCG Scheme

27.The DGFT was the final authority to determine whether or not the export

obligation in respect of capital goods imported under the EPCG Scheme had

been fulfilled. The issue of a certificate by the Director General was sufficient

to conclusively prove that the goods had been validly imported and the export

obligation arising from such import satisfied. Customs could not ignore the

certificate issued by the DGFT and act on an unfounded assumption that the

goods had not been imported under the EPCG Scheme or that the condition

subject to which such import was made had been violated.

28. Export Obligation Discharge Certificate No. 508516 dated 29.05.2007 issued

by DGFT is a proof that we have fulfilled all conditions of the aforesaid EPCG

license. Kind attention of the Commissioner (Appeals) is invited to the circular

no. 62/2002 dated 26.9.2002 where CBEC has in a way clarified that the

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stand taken by DGFT has to be honoured by custom officials. This circular

also shows that EPCG scheme covers items which are directly not capable of

earning any foreign exchange rather they have to be used in the business in

which foreign exchange is earned. Relevant para 3 is reproduced below for

clarity.

Para3. The issue has been re-examined in Board and it has

been decided that service providers who actually require

consumer items like carpets, crockery, marble, chandeliers

etc. shall be allowed EPCG benefit. Chairman, CBEC has

ordered that the rider appearing in DOR Circular No.

39/2000-Cus. may, therefore, be deemed to be deleted.

Import of these consumer items should also be allowed

wherever DGFT authorities have issued EPCG Licences for

these items and the same is valid to cover imported goods.

29. Kind attention of the Commissioner (Appeals) is also invited to the Circular

no. 25/2003 dated 1.4.2003, where CBEC has reiterated that redemption of

Bond/BG against license issued under EPCG Scheme shall normally be

allowed by the Custom House on the basis of EO Discharge Certificate

issued by DGFT authorities without insisting for any other document. This has

been reiterated because admittedly the job of monitoring of export obligation

fulfilled under EPCG Scheme is assigned to relevant DGFT authorities and

not to customs authorities. Relevant para of the circular is reproduced below

for clarity.

Last ParaIt is reiterated that redemption of

Bond/BG against license issued under EPCG Scheme shall

normally be allowed by the Custom House on the basis of

EO Discharge Certificate issued by DGFT authorities without

insisting for production of copies of relevant export

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documents including shipping bill etc. This is because the

job of monitoring of export obligation fulfilled under EPCG

Scheme is assigned to relevant DGFT authorities.

30. Kind attention of the Commissioner (Appeals) is also invited to the Circular

no. 46/2004 dated 26.7.2004, where CBEC has reiterated that Customs

authorities cannot issue SCNs unilaterally in cases where EODC has already

been issued by DGFT. Relevant para of the circular is reproduced below for

clarity.

Para2. It has come to the notice of Board that in some

cases, despite issue of EO Discharge Certificate by theDGFT authorities, Customs has issued show cause notices

to the licence holder questioning the value of imported

capital goods/quantum of export obligation. Later, when the

Commissioner increased the CIF value of imported capital

goods by issue of an adjudication order, CESTAT struck

down Commissioners order on the ground that such

unilateral action by customs was bad in law.

Para 4. It is, therefore, reiterated that in all cases pertaining

to EPCG Scheme where Customs have doubts about

valuation, quantum of EO etc., the jurisdictional

Commissioners of Customs scrupulously follow the

instructions contained in DOR Circular No. 24/2002-Cus.

31. The honourable Joint Commissioner in his findings in para 4.10 of the order

has cited the case of Interglobe Enterprises Ltd Versus Union of India & Ors.,

2006 (203) ELT 202 (Del.). It is mentioned in his findings that it was held in

the said case that the issue of certificate by the DGFT may also not

conclusive in such circumstances for any such certificate cannot circumscribe

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the power of the authority to reopen even a concluded matter if it is shown

that such conclusion was vitiated by fraud, concealments of facts,

misrepresentation or mis declaration.

32. It is noteworthy that the honourable court in the abovementioned case has

allowed customs to investigate the cases but it has not allowed customs to

discharge the function of officers of DGFT. It has not allowed customs to

overrule or nullify the certificate issued by DGFT. In case as per Customs

investigation, there is an element of fraud, concealment of facts,

misrepresentation or mis declaration on the part of importer, Customs is still

required to approach DGFT for revocation of EODC. However, in our case

except making the allegations of suppression of fact, the department has not

adduced even single evidence supporting the allegation of fraud,

concealment of facts, misrepresentation or mis declaration.

Vehicle has not been used as personal vehicle

33. The main contention of the customs is that the car imported by the appellant

is registered as a non tourist vehicle and therefore the car was not used to

earn foreign exchange rather they were used as personal vehicles. The

revenue alleges that the appellant have not earned the foreign exchange by

the use of this car as it was registered in non tourist/taxi category and the

insurance was also done in the non-tourist/taxi category.

34.A perusal of the registration certificate shall show that the vehicle is registered

in the name of company and not as a private vehicle in the name of any

particular natural person. It is duly reflected in the books of accounts and

balance sheet of company. The vehicle was meant to be used in the business

and it has been used in the business. Thus the allegation that it has been

used as a personal car in individual capacity is mere presumption on the part

of revenue. We admit that vehicle was not registered as taxi or tourist vehicle

and thus has not been used as a taxi as there was no requirement under the

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EPCG scheme of the relevant time to get the vehicle registered as taxi. A

vehicle which is not registered as a tourist taxi cannot be used as a tourist

taxi.

The vehicle has been used in the business

35.Under motor vehicle act cars can be registered under two categories. A

vehicle which is going to be used in the business but not meant to be plied as

a paid taxi needs to be registered under non taxi category with one time tax

payment. A car which is going to be used as a paid vehicle for strangers

needs to be registered as a taxi/tourist vehicle.

36. The said car was imported for the use in appellants business and was

registered in the name of the appellant company and has been used for the

business purposes and not as a personal car. There is not any evidence on

the record which shows that the car was not used in the business rather it

was used as a personal vehicle. Mr. Shikhar Jain, MD of the appellant

company in his statement dated 27/06/2007 in response to question no. 21

has stated that the said car was used for the business purposes. Therefore

the allegation that the said car is used as the personal car does not stand at

all. The said car was not registered in the name of any individual person

rather it was registered in the name of Appellant Company. The registration

itself makes it very clear that the imported car is going to be used for the

business of the appellant company.

37. The car has been found to be in use in our business during the visits of

custom officer, we have produced it before customs authorities. We have not

disposed off the cars even after fulfillment of Export obligation and cars have

been seized while in use by us. The cars after provisional release also are still

in use in our business. Further copy of certificate issued by chartered

engineer in respect of Toyota Camry have already been submitted with the

department during investigation and this car was duly reflected in the

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accounts and balance sheet of the appellants company verified by customs

officials. The car is physically present with appellant in running condition

which have been physically seen and seized by customs during investigation.

38. The adjudicating authority in para 4.12 of his finding mentions that the car has

been used for the personal conveyance arbitrarily and in contradiction with his

finding in para 4.8 where it is mentioned that car has been used in business.

Imported car has been used in the business by which forex has been

earned.

39. The customs contended that the appellant have not earned the foreign

exchange by the use of said car. We submit that there was no requirement to

earn the foreign exchange by direct use of car. In fact even if a car is used as

a tourist vehicle, it is not going to earn foreign exchange in India as individual

tourist in India pay in Rupee term alone. Even today when vehicles imported

under EPCG are mandatorily required to be registered as a tourist vehicle,

there is no requirement that there should be direct earning of foreign

exchange by the use of the vehicles. There is no requirement under the law of

one to one correlation between the use of car and foreign exchange earned.

40. The appellant has used the car in the business activity as an official transport

for our clients including foreigners and NRIs. The appellant has got overseas

business from these clients who were impressed with the appellant company

during their visits to the appellant company. Thus the car has been used in

business and been instrumental for earning foreign exchange.

41. The revenues interpretation that all the foreign exchange required to fulfill the

export obligation should be directly generated from the capital goods imported

by the appellant is neither reasonable nor legally correct. One to one

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correlation between foreign exchange earned and the use of the car imported

by the appellant cannot be established even if it is used as taxi or tourist

vehicle. For example: In an instance of a lift imported by a hotelier for

installation in the hotel it was impossible to determine the foreign exchange

earnings out of the use of the lift. Once the imported car was inducted into the

business, it would then be a part of the larger establishment which alone

could generate foreign exchange receipts. Foreign exchange obligation could,

therefore, be satisfied even if the capital goods were not themselves

generating or capable of generating any foreign exchange.

42. The requirement of EPCG scheme as elaborated in various judgments is that

the imported capital goods are pumped into and used in the establishment for

whose benefit the same have been imported. An importer cannot import

goods for a use wholly unconnected with the activity out of which he proposes

to generate the foreign exchange. A travel agent cannot, for instance, import

cars in the name of his business of running the travel agency, but use them

for a purpose other than the said activity. In this case the car imported has

been used in the business in which foreign exchange has been earned. A car

which is registered as a tourist vehicle in India catering to the needs of check-

in tourists cannot export tour services while plying on Indian roads and cannot

earn foreign exchange. Thus foreign exchange earnings by rendering

services for the fulfillment of export obligation under EPCG scheme refers to

foreign exchange earnings by rendering services by the firm which will use

the car in its business. It does not contemplate direct export of services

rendered with the use of car. In our case DGFT has been satisfied with the

provision of law, and have issued EODC on 29.05.2007.

There is no violation of para 5.15 of Hand Book of Procedure.

43. The departments allegation that the appellant violated para 5.15 of Hand

Book of Procedure is baseless and false. For the sake of brevity para 5.15 of

Hand Book of Procedure is reproduced below.

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Maintenance of Records

Para 5.15 Every EPCG authorization holder shall maintain, for a

period of 3 years from date of redemption, a true and proper

account of exports / supplies made and services rendered towards

fulfillment of export obligation.

44. The appellant has maintained a true and proper account of exports of the

services rendered towards fulfillment of export obligation and the relevant

records were submitted to the DGFT on the basis of which DGFT has issued

EODC. This fact is again stated by Mr. Shikhar Jain, MD of the appellant

company in response to question no. 12 of his statement dated 27/06/2007.

He has stated that the said records were also provided to the revenue for

their reference and records. Therefore the appellant has maintained his

account as per requirement of the para 5.15 of Hand Book of Procedure and

there is no question of violation of the para 5.15 of Hand Book of Procedure.

Deposit of penalty is not admission by the appellant

45. In para 4.13 of the order the adjudicating authority finds that the appellant

admitted their mis declaration while importing the said vehicles under EPCG

Scheme and misuse of the said vehicles and also deposited the customs duty

amounting to Rs. 7,62,548/-. It is submitted that deposit of duty does not

amount to admission of guilt on the part of the appellant. Moreover, the said

duty has been deposited by the appellant as per the instruction of the

Customs which is evident from the letters dated 26.06.2008 addressed to

Joint Commissioner of Customs, SIIB, ICD,TKD, New Delhi and dated

02.05.2008 addressed to Superintendent , SIIB, ID, TKD, New Delhi (

Annexure III) by the Appellant.

Car not liable to Confiscation

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46. Since neither there was any prohibition on import of car nor any mis

declaration of value nor of description at the time of import and there is not

any violation of any post importation condition, therefore, the car is not liable

to confiscation. Further the obligations under EPCG license already stands

discharged by issuance of EODC by competent authorities, the car cannot be

confiscated at all. For the sake of clarity Section 111(d) and 111(o) invoked

by learned Joint commissioner for confiscation of car is reproduced below. A

bare reading of these provisions shows that they are not applicable in the

present case at all.

SECTION 111. Confiscation of improperly imported goods, etc. The following goods brought from a place outside India shall beliable to confiscation:

(d) any goods which are imported or attempted to beimported or are brought within the Indian customs waters forthe purpose of being imported, contrary to any prohibitionimposed by or under this Act or any other law for the time

being in force;

(o) any goods exempted, subject to any condition, fromduty or any prohibition in respect of the import thereof underthis Act or any other law for the time being in force, in respectof which the condition is not observed unless the non-observance of the condition was sanctioned by the properofficer;

Case laws on the subject matter

47. In the case of COMMISSIONER OF CUSTOMS, NEW DELHI Vs SOM

DUTT BUILDERS LTD 2009 (236) E.L.T. 478 (Tri. - Del.) demand alleging

that separate income as attributable to imported cars under EPCG Scheme is

neither shown nor any separate records for income from the cars maintained

and cars were not registered as taxi was set aside by Commissioner and the

said order was upheld by the tribunal. It was specifically held that export

obligation was met as at relevant time there was no requirement of

registration of vehicle as taxi/tourist vehicle.

48. The above judgment was followed in AIR TRAVEL BUREAU LTD. Versus

COMMISSIONER OF CUSTOMS, NEW DELHI 2009 (7) E.L.T. 283 where

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the tribunal held that understanding of DGFT cannot be brushed aside by

customs authorities. The relevant para of judgment is reproduced below.

6.3 We find that the Customs authorities have taken up the matter with theDGFT 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 Customsauthorities 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.

49. The above order has been upheld by Delhi HC as reported in THE

COMMISSIONER OF CUSTOMS Versus AIR TRAVEL BUREAU LTD AIT-

2010-364-HC. The facts of this case are identical to the present one where

imported car was not registered as taxi and was directly not used for earning

foreign exchange. The relevant para of decision is given below for clarity.

2. It is found as a matter of fact that the respondents are in the business of travel

agency and the cars were utilized for the intended purposes i.e. they were added

attraction for the foreign tourists to come to India and the respondents rendered

the services of arranging/ booking air and train tickets, accommodation, site-

seeing and booking train tickets etc. Without these services, rendered by the

respondents, incremental foreign exchange earnings could not have been

achieved. Another finding of fact which is recorded by the Tribunal is that it has

not been shown before the Tribunal that the imported vehicles had been used for

any purpose other than those related to travel and tour as stipulated in EPCG

license. On this basis, the Tribunal opined that the term tour and travel is a very

wide term and it cannot be said that the EPCG license envisaged only the

amounts collected by use of imported cars to be accounted towards export

obligation under the said license.

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..

..

6. Once we apply this yardstick to the facts of the present case, the conclusion

would be that the respondents have been able to fulfill the obligation under

EPCG license as pointed above, which was the very condition imposed in the

said license by the DGFT. DGFT has redeemed the license and has taken the

view that the respondents have fulfilled their export obligation. No doubt, the

opinion of the DGFT would not be conclusive and any such certificate cannot

press the power of the authority to reopen even a concluded matter if it is shown

that the such conclusion was vitiated by fraud concealment of facts or

misrepresentation or misdeclaration as held by the Apex Court in Sheshank

Sea Foods Pvt. Ltd. v. Union of India & Ors. (1996) 11SCC 755. However, in

the present case, the appellants have not been shown that there is any fraud,

concealment of facts or misrepresentation or misdeclaration on the part of the

respondents.

50. The appellant further rely on the Honble Delhi High Court judgment in the

case of Interglobe Enterprises Ltd Versus Union of India & Ors., 2006 (203)

ELT 0202 (Del.) where the court endorsed the appellants view and held that

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

hotel or the cars imported by the travel agent, the least that the importer must

demonstrate is that the goods were put to use for the business activity for

which the same were imported. The relevant para of that judgment is

reproduced below.

12. Two interpretations are, thus, being offered by the parties to the terms of the

policy. The one offered by the petitioner if accepted would mean that once the

capital goods are harnessed into the establishment, it is not necessary that the

export obligation should be fulfilled only from out of the earning of the said

goods. Foreign exchange earned generally by the importer can be used for

satisfying the export obligation as had been done in the instant case. The other

view is that export obligation could in the case of the cars imported by the travel

agent be satisfied only by use of the cars and not otherwise. The importer has,

therefore, not only to utilize the goods* but, satisfy the export obligation from out

of foreign exchange earned by such use. 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

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in a hotel or the cars imported by the travel agent, the least that the importer

must demonstrate is that the goods were put to use for the business activity for

which the same were imported. The Scheme does not in our view envisage

imports where the goods are not meant for use in the business activity of the

importer nor can the goods be diverted for some other use without violating the

conditions of actual user which is fundamental to the Scheme. The on-going

investigations would, therefore, unravel whether the imported capital goods, i.e.,

the cars in question were ever inducted into the business of the importer. That

assumes importance because, according to the respondents, the cars were not

even registered for the commercial activity for which the same were imported as

was mandatory under Section 39 of the Motor Vehicles Act. There was,

according to them an unauthorised diversion of goods contrary to the spirit of the

Scheme, which could be investigated and made a basis for further action against

the importer. The investigation instituted by the Directorate of RevenueIntelligence officers may in that above backdrop lead to the discovery of the true

facts which would eventually lead to the issue of a show cause notice to which

the petitioner can respond appropriately. Expression of any opinion by this Court

at this stage would in that view be premature and would amount to pre-judging

the issue which may arise at the appropriate stage in the context of the facts

established in the course of the investigation.

51. The case of Bright Star Hotels Pvt. Ltd decided by Joint DGFT in the exercise

of proper jurisdiction agreeing that there is no need to earn foreign exchange

by direct use of capital goods, namely cars.

52. In the case of Indian Hotels Co. Ltd v. CCE Mumbai 2006 (204) E.L.T 439

(Tri. - Mumbai) it was held that it is for the DGFT to satisfy itself whether

goods are eligible for EPCG scheme and customs function is ministerial in

nature.

53. In the case of Crystal Fashions V. CC Chennai 2007(211) E.L.T 580 (Tri. -

Chennai) it was held that customs cannot ignore the certificate issued by

DGFT.

54. In the case of CC (export) Mumbai V. Rajasthan Spinning & Weaving Mills

Ltd 2008 (229) E.L.T 614 (Tri- Mumbai) it was held that mere declaration of

importer is sufficient unless contrary evidence of mis-utilization is brought on

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record. The burden of proof for mis-utilization of EPCG scheme is on the

revenue.

55. In the case of Kingsway Fashions Pvt. Ltd V. CC Bangalore 2006 (201) E.L.T

292 the honourable tribunal held that revenue cannot issue SCN unless the

period of licenses under which the export obligation needs to be fulfilled

expires. In our case the eight year period expires in 2011 and thus present

SCN needs to be set aside on this ground also.

56. In the case of M FAR HOTELS LTD Versus COMMISSIONER OF

CUSTOMS, COCHIN 2009 (241) E.L.T. 94 (Tri. Bang) it was held that it is

not necessary that assessee is to show the amount of foreign exchange

earned on account of exclusive use of car. Even if the vehicle is registered in

the name of Director of the Company the benefit of exemption cannot be

denied.

57. In KUMARAKAM LAKE RESORTS Versus COMMISSIONER OF

CUSTOMS, COCHIN 2010 (253) E.L.T. 262 (Tri. - Bang.) it was held that

installation in respect of transport vehicle is not appropriate and despite any

technical violation by the assessee the benefit of exemption cannot be

denied.

No Penalty imposable

58.As the demand of duty itself does not survive, no penalty is imposable on

anybody. Further this is a pure case of interpretation of EPCG Scheme and

thus penalty is not imposable on anybody as held by courts in numerous

cases.

Personal Hearing

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59.In any case, we may be given an opportunity of personal hearing before a

final decision is taken in the matter.

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P R A Y E R

60. In view of what is stated above the appellant most humbly prays to the

honourable Commissioner (appeals) that

i. The OIO No. 66/2010 dated 02.11.2010 passed by Joint

Commissioner of Customs (Export), Jawaharlal Nehru

Custom House, Nhava Sheva, Tal-Uran, Raigad be set

aside with consequential relief.

ii. Any other order may be passed as deemed fit in the facts

and circumstances of the case

Appellant

VERIFICATION

I, Shikhar Chandra Jain do solemnly declare that I am filing this appeal in my

capacity as Managing Director of the appellant company and I am competent to

verify it.

That the contents of this appeal are true to the best of my knowledge and belief

and no information relevant to the facts of the case has been suppressed.

Verified today, the 19th day of November, 2010.

Deponent

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BEFORE


Jawaharlal Nehru Custom House, Nhava Sheva, Tal-Uran, Raigad,

Maharashtra

Stay Application No..................................................of 2010

In

Appeal No.....................................................................of 2010

Arising out of Order-in-Original No. 66/2010 dated 02.11.2010

Passed by Joint Commissioner of Customs (Export), Jawaharlal Nehru CustomHouse, Nhava Sheva, Tal-Uran, Raigad

M/s Travel Planners Pvt. Ltd, - AppellantA-244, Mahipalpur Extension,N.H 8, New-Delhi - 110037

V.

Commissioner of Customs - RespondentJNCH, Nhava Sheva, Raigad, Maharashtra

BRIEF FACTS

1. We M/s. Travel Planners Pvt. Ltd (hereinafter referred as

appellant), A 244, Mahipalpur Extension, NH 8, New Delhi are

providing various services such as travel, ticketing, tourism, logistic

Services etc to our clients located in India as well as abroad. We also

earn significant foreign exchange by providing our various services to

clients located outside India.

2. The appellant is filing an appeal along with this stay application

against Order-in-Original No. 66/2010 dated 02.11.2010 passed by

Joint Commissioner of Customs (Export), Jawaharlal Nehru Custom

House, Nhava Sheva, Tal-Uran, Raigad. The appellant prays that the

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operation of said order be stayed and appeal be heard without insisting

for any further deposit on following grounds.

i. The appellant has a very strong case on merit. The

detailed facts and ground of appeal are already narrated

in appeal and for the sake of simplicity not repeated here.

The appellant prays that grounds of appeal narrated in

appeal be treated as part and parcel of this application.

ii. The entire duty amount confirmed in the said OIO already

stands deposited with the department.

iii. Since appellant has got a very good case on merit, any

further deposit shall cause undue hardship to the

appellant.

iv. The appellant has a permanent establishment at

Mahipalpur, New Delhi and Govt. Revenue is safe.

PRAYER

3. In view of what is stated above the appellant most humbly prays to

the Commissioner (Appeals) that

a. The operation of order passed by Joint Commissioner Customs

(Export) be stayed and recovery of penalty be stayed during the

pendency of appeal.

b. Any other order may be passed as deemed fit in the facts and

circumstances of the case.

Appellant

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VERIFICATION

I, Shikhar Chandra Jain do solemnly declare that I am filing this application in my

capacity as Managing Director of the appellant company and I am competent to

verify it.

That the contents of this appeal are true to the best of my knowledge and belief

and no information relevant to the facts of the case has been suppressed.

Verified today, the 19

th

day of November, 2010.

Deponent