TMI Blog2010 (12) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... the two Presidential suits referred to in the adjudication order should be attributable to the foreign exchange earnings out of the use of the two cars, no matter they were allowed to be used by the foreign tourists in violation of the provisions of the M.V. Act and Rules. - Appeal is allowed by way of remand - 51 of 2009 - - - Dated:- 21-12-2010 - C.N. Ramachandran Nair and Bhabani Prasad Ray, JJ. REPRESENTED BY : Shri John Varghese, SC, CBEC, for the Appellant. Shri A. Ranjith Narayanan and G. Natarajan, for the Respondent. [Judgment per : C.N. Ramachandran Nair, J. ]. This is an appeal filed by the Commissioner of Customs challenging the order of the Customs, Excise and Service Tax Appellate Tribunal [2010 (253) E.L.T. 262 (Tribunal)], cancelling the adjudication order issued by him against the respondent confiscating the two BMW cars imported by the respondent under Section 111(o) of the Customs Act and demanding differential duty of customs, interest and penalty for violation of the conditions of customs Notification 44/2002 dated 19-4-2002 under which imported cars were released at concessional rate of duty of 5% as against 160% for the normal import of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through the use of capital goods imported under the notification claiming concessional rate of duty. In fact in terms of the conditions in the notification, what was required by the respondent was to register the two imported cars under Section 66(1) of the M.V. Act, 1988 and make them available for use by the tourists coming to hotel. In fact since installation in the literal sense in respect of capital goods in the form of luxury cars could be done only by producing proof of fitness of the vehicles for rendering services to the foreign tourists coming to hotel, respondent was bound to take tourist taxi permit under the M.V. Act and report compliance within six months in terms of the notification. Respondent on the other hand got the vehicles registered in the name of the Managing Director and Director of the respondent-company respectively and the registration of the vehicles is in the category of private vehicle . Customs department however did not follow up what the respondent was doing with the imported cars and no action was taken by them for violation of the bond executed, that is failure of the respondent to furnish certificate of registration or permit taken for suitabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e show cause notice, there is a general statement that foreign tourists were allowed to use the cars, both the Administrative Manager and Director of the respondent-hotel while giving statement to the department, specifically stated that picking up facility from the airport and dropping back of the tourists at the airport were the only services rendered with the two foreign cars to foreign tourists, that too only for the visitors who were given accommodation in two Presidential Suits bearing Room Nos. 150 and 151 in the hotel. Customs authorities therefore noticed that violations are rather admitted and therefore show cause notice was issued proposing to confiscate the vehicles under Section 111(o) of the Customs Act and for violation of the conditions of import, but at the same time allowing the respondent to redeem the vehicles on payment of redemption fine and along with it differential customs duty payable under Section 28(1), interest payable under Section 28AB and penalty payable under Section 114A of the Act. 4. Before us, standing counsel appearing for the department contended that facts are rather admitted and the only question is whether cancellation of bond and release ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even without permit two vehicles were used for rendering services in the form of pick up from the airport and dropping back to the airport to those tourists who occupied two Presidential Suits, Room Nos. 150 and 151. While the export obligation to be fulfilled by the respondent in the course of 8 years from the date of issue of licence was inasmuch as US $ 4,02,381, the total receipt from the two rooms, which is essentially towards rent and food charges, was US $ 54,851. Going by the statement of the Manager and Director of the respondent-hotel and even if the use of cars for rendering services to the foreign tourists without permit is condoned, at the maximum the total receipt from the two rooms that is US $ 54,851, could be considered as foreign exchange earnings of the respondent against export obligation in terms of the notification under which import of the vehicles was done at concessional rate. Counsel for the respondent referred to the clarification issued by the DGFT wherein they say that even if there is no separate account maintained for the use of the imported cars by the hotel industry, still the importer cannot be denied the benefit of concessional rate of duty, if t ..... 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