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2015 (12) TMI 1045 - AT - CustomsDenial of the benefit of EPCG license - Import of cars - export obligations - cars were not put to proper use inasmuch as they were not used for providing transport facilities to the guests of the hotel to earn foreign exchange. - cars were insured as personal vehicles - cars were carrying the registration number in the incorrect colour code and different perceptions about the use to which the cars were put. The statements of drivers indicate that the cars were used by the Directors - benefit of Notification No. 97/2004-Cus dated 17.6.2004 - Held that:- Condition for import clearly stipulates that the car imported by HEL were to be used by HEL in their service industry - Handbook of Procedure mandates that every EPCG authorisation holder has to maintain for a period of three years from date of redemption, a true and proper account of exports/supplies made and services rendered towards fulfilment of export obligation. This Policy does not envisage that a service provider importing the goods under EPCG authorisation will have to change the character of service depending upon the goods imported which means that a hotel importing laundry equipment will have to render service of washing clothes of foreign tourists and earn foreign exchange in the process. Therefore, it cannot be construed that hotel importing cars will have to provide transportation to the foreign tourists and earn foreign exchange in the process. It only means the cars are to be used by HEL for providing hotel services to foreign guests. The export obligation means in relation to importers rendering services receiving payments in freely convertible foreign exchange for the services rendered through the use of capital goods. Therefore, the export obligation in relation to HEL rendering hotel services means receiving the payment in convertible foreign exchange for the hotel services rendered through the use of cars by HEL. - cars have been used by HEL for providing hotel services to foreign guest by using the car by their Directors. It is not the case of the Revenue that these cars were not used by Directors who are ultimately managing the hotel. Therefore, in this case the cars have been indirectly used by HEL in providing hotel service to foreign guest. It is not the case of the department that the cars have not been put to such indirect or lateral use to discharge for export obligation. The custom notification does not provide for such indirect or lateral use of the capital goods imported under EPCG scheme. The export obligation for the importer rendering service means receiving payment in convertible foreign exchange for service rendered through the use of capital goods. Therefore, if the cars were used directly or indirectly for providing the hotel services from which the foreign exchange is earned, the conditions no where suggest that the nature of service to be provided by the importer or to be governed by the type of capital goods provided. As in the case of other goods like lift and chair do not envisage the use by foreign tourist, the car are to be used by foreign tourist, implying thereby that while other capital goods could be used indirectly or laterally, the cars could not be so used and were to be used by foreign tourists. - HEL has not obtained export obligation discharge certificate and the licences have not been redeemed and during the course of adjudication, HEL has been able to show that the cars in question have been used by the foreign tourist and that is intended the use and there was (still) time available to discharge export obligation and so the action by DRI was premature. - proceedings initiated against HEL and its Directors for violation of condition of notification or the EPCG licence are not sustainable as the same are pre-mature as HEL is still in possession of the cars and registered the same as tourist vehicle. Consequently, the impugned orders are not sustainable in the eyes of law. Accordingly, the impugned orders are set aside. - Decided in favour of assessee.
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