The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that once the License authority having been satisfied about fulfilment of export obligation, the Customs authorities are bound to accept it.
The department was of the view that the respondent, M/s. Joy’s the Beach Resort Pvt. Ltd, had violated the condition of the notification in as much as the car was not registered as tourist vehicle for a substantial period and also that the foreign exchange was received from various other services and not by use of the car. The respondents did not maintain proper vehicle movement records and the vehicle travel journey documents showed only very less amount collected from using the vehicle for travel purpose.
Show Cause notice was issued to the respondent under section 124 read with section 28 (1) of Customs Act 1962 proposing to deny the benefit of exemption of the notification and for demand of differential duty along with the interest, for confiscation of the vehicle and for imposing penalties. After due process of law, the original authority vide order dated 10/10/2012 denied the benefit of notification to the respondent and confirmed the differential duty.
Rudra Pratap Singh appeared and argued for the department. The AR vehemently relied on the decision of the Tribunal in the case of Surya Samudra Holiday Resorts Pvt. Ltd. Vs CC (Export) Mumbai, to argue that all the very same points were considered by the Tribunal in the said case and it was observed that the proceedings against an assessee for violation of conditions of the exemption notification was not pre-mature at any stage and can continue without Directorate General of Foreign Trade (DGFT’s) concurrence.
The counsel, Gokul Raj appeared and argued for the respondents. It is submitted that the respondent Viz; Joys, the Beach Resorts Ltd. had imported one ‘Nissan X Trail Car’ under the EPCG scheme under concessional duty. The vehicle was initially registered as a private vehicle which was subsequently re-registered as a tourist taxi with effect from 28/3/2006. This was done as per the relevant policy circular issued by the DGFT.
A Two-Member Bench comprising Vasa Seshagiri Rao, Technical Member and Sulekha Beevi CS, Judicial Member relied on the judgment of the Bombay High Court in Bhilwara Spinners v. Union of India, wherein it was held that “Once the licencing authority has found that the licencing conditions have been fulfilled, it would not be open to the customs authorities too contend that the imports under the licence are contrary to law and take action against the licence holder.”
The Tribunal further observed that “The allegations put forth in the show cause notice is that the respondent had not registered the vehicle as tourist vehicle and also that the foreign exchange earned fully and accounted for the purpose of obtaining Export Obligation Discharge Certificate (EODC) was not earned by using the imported car. It is seen that the very same issues had come up for analysis before the Tribunal in the respondent’s own case with regard to the import of Mercedez Benz car under Export Promotion Capital Goods (EPCG) scheme.”
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