2026-VIL-741-CESTAT-CHE-CU
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CUSTOMS CESTAT Cases

Customs - Fulfilment of export obligation through third party exports under EPCG Scheme, demand of differential duty - The appellant importer had obtained EPCG licenses and discharged the export obligation through third party exports. The Department alleged that the exports were not genuinely made by the appellant using the imported capital goods and the EODC obtained by the appellant was fraudulent - Whether the demand of differential duty can be confirmed on the ground that appellant has violated conditions No. 2 & 4 of the notification No. 97/2004-Cus. dated 17.09.2004 when EODC was already issued by DGFT – HELD - The provisions relating to third party exports under the EPCG Scheme were ambiguous at the relevant time. The DGFT had clarified the issue of third party exports and restored the EODC obtained by the appellant. The subsequent policy changes regarding third party exports cannot be made applicable retrospectively – Further, once the DGFT authorities exercised their jurisdiction and satisfied themselves that the export obligation was fulfilled by the appellant within the stipulated time and redeemed the bank guarantee, the customs department does not have any jurisdiction to sit in judgment over the EODC issued by the DGFT. If there was any misrepresentation, it was for the licensing authority (DGFT) to take steps in that behalf – The appellant cannot be penalized for the alleged procedural violations due to the lacuna in the Foreign Trade Policy and the Customs Notification - The demand and penalties in respect of the imports made under the two EPCG licenses are set aside, while upholding the findings in relation to the other two licenses which were not challenged by the appellant – The appeal is allowed
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GSTAT Appeal filed wrongly...
By CA Vivek Jalan

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