2025-VIL-734-CESTAT-KOL-CU
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CUSTOMS CESTAT Cases

Customs - EPCG License, Export Obligation, Deemed Exports - Appellant was issued an EPCG license to import capital goods on payment of concessional customs duty but failed to fulfill the export obligation during the first two-year block period - DRI issued show cause notices demanding recovery of customs duty, interest and penalty for non-fulfillment of export obligation - Whether the EODC (Export Obligation Discharge Certificate) issued by the DGFT in 2012 certifying fulfillment of export obligation should be accepted – HELD - The DGFT is the competent authority to determine the fulfillment of export obligation under the foreign trade policy - the DGFT authorities have accepted the compensation fee paid towards the export obligation and concluded that the appellant had fulfilled their export obligation - Once the DGFT has issued the EODC in 2012 certifying that the company had fulfilled its export obligation, the Customs authorities cannot ignore this and initiate recovery proceedings - the Customs authorities cannot refuse the exemption benefit on the allegation of misrepresentation, if the licensing authority (DGFT) has not taken any action. When the proper authority has already considered the fulfilment of export obligation, raising of demand of Customs duty on the ground that they have not fulfilled the export obligation, is not legally sustainable - the demand of duty, interest and penalties confirmed in the impugned order are set aside – The appeal is allowed - Whether the supplies made by the company to M/s. Timken India Ltd. (a Star Export House) can be considered as 'deemed exports' for the purpose of fulfilling the export obligation – HELD - Since the EPCG license number and date were not endorsed on the shipping bills of M/s. Timken India Ltd., the supplies made by the company cannot be treated as 'deemed exports' as per the Foreign Trade Policy requirements. However, since the DGFT has accepted these supplies as fulfillment of export obligation in the EODC, the customs authorities cannot raise a demand.
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