DGFT issues EODC against Imported Cars: CESTAT rules Customs cannot Demand duty Once obligation Discharged and Certified
CESTAT held that once DGFT issued the EODC confirming export obligation fulfillment, Customs could not reassess compliance, and therefore the duty demand was unsustainable.
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the appeal, holding that once the Directorate General of Foreign Trade (DGFT) has issued the Export Obligation Discharge Certificate (EODC), Customs authorities cannot sit in appeal over DGFT’s satisfaction of export obligation under the EPCG Scheme, and therefore the duty demand...
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the appeal, holding that once the Directorate General of Foreign Trade (DGFT) has issued the Export Obligation Discharge Certificate (EODC), Customs authorities cannot sit in appeal over DGFT’s satisfaction of export obligation under the EPCG Scheme, and therefore the duty demand was unsustainable.
The dispute arose after the department issued a Show Cause Notice (SCN) alleging that the appellant, Interglobe Enterprises Pvt. Ltd. had failed to fulfil the export obligation against the import of cars under the EPCG Scheme and proposed to demand customs duty, interest, and penalties.
The adjudicating authority confirmed the duty and interest, holding that the appellant did not meet the required export performance.
The appellant submitted before the Tribunal that the DGFT, being the competent authority under the Foreign Trade Policy, had already scrutinized the export documents and issued the EODC, certifying fulfillment of the export obligation. They argued that once the EODC was issued, Customs had no jurisdiction to dispute compliance.
The appellant relied on decisions such as Titan Industries Ltd. v. Commissioner of Customs, New Delhi (2003), holding that when DGFT certifies fulfilment of export obligation, Customs authorities cannot reassess or question DGFT’s satisfaction.
The Bench comprising Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) examined the DGFT’s issuance of the EODC and noted that the authority competent to mandate and monitor export obligation under the Foreign Trade Policy is the DGFT and not Customs.
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The Tribunal observed that once the DGFT has issued the EODC after verification of records, Customs cannot dispute the fulfilment of export obligation or initiate recovery.
The Tribunal held that the appellant had completed the export obligation to the satisfaction of the DGFT and that the demand confirmed by the adjudicating authority was contrary to the settled legal position. It further held that the department could not demand duty or interest once the export obligation was discharged and certified.
Accordingly, the CESTAT set aside the impugned order and allowed the appeal to the Appellant.
The Appellant was represented by B. L. Narasimhan, Anjali Gupta along with Ashwani Bhatia, while Nikhil Mohan Goyal appeared for the Revenue.
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