2025-VIL-2149-CESTAT-CHE-CU
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CUSTOMS CESTAT Cases

Customs – Import of capital goods – Demand of differential duty – Dropping of demand – Respondent is engaged in manufacture of motor vehicles – In course of its business, Respondent had imported various capital goods by availing benefit of concessional rate of duty under Export Promotion Capital Goods (EPCG) Scheme in terms of Customs Notifications – Investigation culminated in issuance of show cause notice to Respondent by proposing demand of differential duty – Chief Commissioner dropped demand as proposed in show cause notice – Whether Respondent has violated conditions of notifications to merit demand of differential duty – HELD – Adjudicating Authority had gone on to examine requirement of endorsement of supporting manufacturers in corresponding authorisations. Examining the validity of allegation that capital goods have been moved to premises of vendors without valid endorsements, it has been found that in respect of ten vendors, names were already endorsed in eight EPCG licences prior to issue of subject notice. All impugned capital goods continue to remain in rightful ownership of Respondent despite being installed in various vendor’s premises. Capital goods satisfy the actual user condition till such time of completion of export obligation. Remaining conditions of notifications are only guardrails to ensure compliance of main condition of fulfilment of export obligation. When there is no allegation about non-fulfilment of two substantial conditions of Notifications/EPCG Scheme, viz., completion of export obligation and non-alienation of capital goods, demand of duty cannot be legally sustained. Impugned order-in-original is uphold – Appeal dismissed
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