TMI Blog2015 (6) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... a particular place, or to seek its registration only from any particular RTO office. Mere parking of the vehicle at a particular place cannot be considered as violation of actual user condition or proof of the usage of vehicle in a particular manner or of transfer of ownership. - Neither there is any documentary evidence of sale of the vehicle to any other person / entity with any evidence of corresponding payment, nor has the Appellant claimed having sold the vehicle in question. It is not in dispute that the vehicle is still shown as fixed asset in the Balance Sheet of the Appellant Company. Most importantly, no evidence of any change of ownership of the vehicle in the name of any other person / entity is forthcoming from the records of RTO. The record of registration with the RTO conclusively shows that the ownership of the vehicle remains with the Appellant Company and continues to be for "Tourist Purpose". These are not even disputed by the adjudicating authority. It cannot therefore be said that the vehicle has already been sold and transferred in violation of the actual user condition. "Export Item Name" for the Appellant Company as seen from the Condition Sheet attached ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny. It is also not in dispute that the balance sheet of the appellant company filed with the Registrar of Company also shows the vehicle in the fixed assets of the company. Some statements also positively assert that the vehicle was actually being used by the WIP guests and thus were used for providing Hotel and Tourism related services. Therefore, there is no tangible evidence to support the basic charge in the Show Cause Notice for demanding duty. Some of these statements at the most give room for suspicion, but cannot replace the tangible proof required in such cases. The benefits conferred under the FTP therefore cannot be denied to the Appellant. We find that neither the Foreign Trade Policy nor the Exemption Notification lay down the nature of day to day record to be maintained by the licensee in respect of foreign exchange earned from the imported capital goods. It is nowhere provided that details of each journey undertaken or name of foreign guest who used the car or the amount and mode of payment should be recorded. The service provider has been given the freedom to use the imported capita! goods in whatever way he considers best to earn the incremental foreign exchange ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany, under Chapter 5 of the Foreign Trade Policy, for import of one Rolls Royce Ghost model car at concessional rate of duty with obligation of export of services, namely Hotel Tourism related services to be completed in 8 years. The condition sheet dated 29.09.2010 attached to the EPCG Licence mandates that the vehicle was to be registered for tourist purpose only . The export obligation was to be fulfilled as per para 5.8 of the Hand Book of Procedure (HBP). 3. The Bill of Entry No.804920 dated 06.11.2010 was thereafter filed for importing the Rolls Royce Ghost model car on payment of BCD @ 3% (concessional rate) availing benefit of exemption of duty under Notification No.103/2009-Cus dated 11.09.2009 against the said EPCG License dated 29.9.2010. A bond was submitted by the Appellant Company, which binds them inter alia to observe all conditions of Notification No.103/2009-Cus dated 11.09.2009. The proper Officer assessed the Bill of Entry under EPCG Scheme and the vehicle was cleared from Customs by endorsing the Bill of Entry for registration for Tourist purpose only. 4. On 23.05.2013, the Customs Preventive Unit commenced investigations with search/seizure a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rounds raised in the Appeal and submitted that the impugned Order was erroneous and no condition of EPCG license or the Exemption Notification was violated by the Appellants. 7. We have carefully considered the submissions of both the sides and have perused the records and the relevant provisions and conditions of exemption. 8. The relevant conditions under the EPCG licence, provisions of the Foreign Trade Policy and the conditions of the Exemption Notification are as under- (A)Conditions of EPCG Licence (Para 18.2 and 18.3.2 of the impugned Order): 1. This Authorisation has been issued under Chapter 5 of Foreign Trade Policy 2009-2014 and carries an export obligation to export to GCA countries and realise the export proceeds in freely convertible currency and is subject to the conditions as laid down in Chapter 5 of Foreign Trade Policy and Procedures Vol.1 2009-2014. The authorisation holder shall supply goods to categories carried under para 8.2 (a), (b), (d), (f), (g) and (j) of the policy. 2. The firm is under obligation to Export Item S.No. ITCHS Code Export Item Name 1. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e vehicles such as chassis etc. cannot be imported under the EPCG Scheme. Eligibility 5.3 EPCG scheme covers manufacturer exporters with or without supporting manufacturer(s)/ vendor(s), merchant exporters tied to supporting manufacturer(s) and service providers..... Conditions for import of Capital Goods 5.4 Import of capital goods shall be subject to Actual User condition till export obligation is completed. Para 5.8 and 5.15 of the Handbook of Procedures: Conditions for fulfillment of Export Obligation 5.8 The Authorization holder under the EPCG scheme shall for fulfill the export obligation over the specified period in fulfillment of the following proportions: For concessional 3% duty EPCG Scheme Period from the date of issue of Authorization Minimum export obligation to be fulfilled Block of 1st to 6th year Block of 7th and 8th year 50% 50% Maintenance of Records 5.15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant Commissioner of Customs binding himself to comply with all the conditions of this notification as well as to fulfill export obligation on FOB basis equivalent to eight times the duty saved on the goods imported as may be specified on the authorisation, or for such higher sum as may be fixed or endorsed by the Licensing Authority or Regional Authority in terms of Para 5.10 of the Handbook of Procedures Vol I, issued under para 2.4 of the Foreign Trade Policy, within a period of eight years from the date of issue of Authorization, in the following proportions, namely:- S. No. Period from the date of issue of Authorization Proportion of total export obligation (1) (2) (3) 1. Block of 1st to 6th year 50% 2. Block of 7th to 8th year 50% ....... Provided also that export obligation of a particular block may be set off against the excess exports made in the said preceding block(s); ....... (7) that the capital goods imported, assembled or manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se and submitted to the customs authorities are bogus or contrary to the records of RTO. Condition (iii) of para 2(1) of the Exemption Notification has thus been complied with. 11. The DGFT Policy Circular No. 26/2009-14 dispenses with the production of installation certificate for moveable capital goods such as vehicles imported under EPCG scheme by Service Providers, as they are movable capital assets and cannot be installed at one particular location. All Customs Authorities have been instructed by this Policy Circular no. 26/2009-14, not to insist on the 'installation certificate' for such movable capital assets / goods, if imported under EPCG scheme. Therefore, non-production of installation certificate of the vehicle is not in contravention of the EPCG scheme. 12. It can neither be presumed at this stage that the Appellants cannot or would not complete their export obligation under the EPCG license, nor can the vehicle be confiscated on this presumption. Department has not proved that the actual user condition has been violated by disposing of or transferring the vehicle by sale or lease or any other manner before completing the export obligation. 13. There i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... importer must demonstrate is that the goods were put to use for the business activity for which the same were imported. The scheme does not in our view envisage imports where the goods are not meant for use in the business activity of the importer nor can the goods be diverted for some other use without violating the conditions of actual user which is fundamental to the Scheme. The on-going investigations would, therefore, unravel whether the imported capital goods i.e. the cars in question were ever inducted into the business of the importer. That assumes importance because, according to the respondents, the cars were not even registered for the commercial activity for which the same were imported as was mandatory under Section 39 of the Motor Vehicles Act. There was, according to them an unauthorized diversion of goods contrary to the spirit of the Scheme, which could be investigated and made a basis for further action against the importer...... There is no dispute that thereafter on similar lings, the office of DGFT has already clarified vide File no. 01/94/180/518/AM07/PC-1/770 dated 27.12.2006. in another case of import of vehicle under EPCG scheme as follows- 4. As r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the fleet of the aforesaid two imported cars, the respondents have been able to attract foreign tourists to come to India by providing these services, the foreign exchange earned through the foreign tourists would be treated as earning of foreign exchange by using those cars as well. (Emphasis ours) The SLP (Civil) CC no. 6483-6484 of 2011 filed by the department against the said judgment was also dismissed by the Hon'ble Supreme Court on 18.4.2011, as reported in 2011 (268)ELTA110 (SC). We therefore find no impediment in use of the vehicle by or under the directives of the CMD for promotion of Hotel and Tourism related services . Just like a lift imported under EPCG scheme can be used by every guest, CMD and staff of the Hotel without violating the actual user condition, there cannot be any impediment in use by them of the vehicle imported under EPCG scheme in connection with Hotel and Tourism related services , as long as the vehicle is also used in providing these services in discharging the export obligation. 15. In the instant case, the Export Item Name for the Appellant Company as seen from the Condition Sheet attached to their EPCG license is Hotel an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission that in a larger sense, the minor expenses of the different entities do not make any substantial difference to the family and it therefore cannot be gainfully said that if fuel expenses or salary of a driver were not borne by the hotel, the car was not used by the hotel. 19. Even if the words 'All India Permit' are not mentioned on the vehicle registered as a Tourist Vehicle with a Tourist Permit, neither it is in violation of any mandatory condition of the EPCG License nor of the Exemption Notification. Neither the person in whose name the visitor pass was issued has been questioned, nor can such a Pass be a conclusive evidence to prove that the vehicle was not being used by the Hotel for providing services. The General Manager - Finance, Shri Bhaskar VS in his statement dated 23.5.2013 inter alia stated that the said vehicle was being parked at the residence of CMD of the Hotel for security reasons and that the said vehicle was given to guests on complimentary basis. He also stated that the expenses towards repairs and maintenance of the vehicle are met by the Hotel. Shri S.M. Doss, the General Manager in his statement dated 23.05.2013 inter alia stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s meant only for personal use of CMD-Shri Prakash Shetty and that the actual use of the imported vehicle was mis-stated at the time of importation are not established on facts. 22. In view of the above, we cannot expect that in the Corporate Sector one can expect the employees to meddle in every affair and to keep themselves abreast of all the developments of a company. When certain people say that they have not noticed the vehicle being used for transporting guests of the hotel, it can only be taken to establish their lack of knowledge of that fact and nothing more than that. In order to say that the cars were never used to transport the guests of the hotel, the improbability of that event to occur should have been mustered as evidence, which is not forthcoming. Presumptions and assumptions cannot be sufficient to uphold the allegations. 23. There is no dispute on the fact that the vehicle was registered as tourist cab that is for Tourist purpose, and a Tourist Permit was obtained from RTO. Later on it was migrated to RTO Bangalore from RTO Chitradurga (both within the State of Karnataka). However, there is no dispute that it remains registered in the name of the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is represented by the Departments, can only speak with one voice. Having regard to the language of the 1993 G. O. it was the view expressed by the Department of Industries which must be taken to be that voice. We find that in the case in hand different yardsticks are being applied by two different wings of the Central Government. The Central Government through Ministry of Commerce has notified the Foreign Trade Policy under the provisions of FTDR Act, 1992, which confers the right of beneficial exemption from payment of custom duty on fulfilment of conditions mentioned therein, and upon following the procedure published by way of Public Notice in the Handbook of Procedure. Neither any condition imposed either in the Foreign trade Policy or the Handbook of Procedure has been violated by. the Appellant, nor have any proceedings been initiated against the Appellant under the provisions of FTDR Act, 1992. On the other hand another wing of the Central Government through Ministry of Finance, Department of Revenue, seeks to deny the benefit of the exemption by adopting a different interpretation of the provisions of the Policy or on the basis of the Notifications issued under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HBP, nor any further clarification or instructions may be insisted by the Customs Department, when the provisions of the FTP and HBP mandate grant of such benefit. In M Far Hotels Limited vs Union of India, 2011 (270) ELT 158 (Ker. HC), despite there being absence of any Notification under,the Customs Act to confer the benefit of duty credit otherwise permissible as per the DGFT, the Hon'ble Kerala High Court was pleased to observe that- 3. During the pendency of this writ petition, the Director General of Foreign Trade has issued Exts. P17 and P18 clarifying the position, as a result of which, the petitioner is entitled to get duty credit in respect of the goods imported under Exts. P9 to P15 referred to above. In view of this clarification, the petitioner is also entitled to avail of the benefit of the duty credit certified under Exts. P5 to P5(d) and P6 licence as well. 4. In the light of Exts. PI7 and P18 clarifications issued by the Director General of Foreign Trade, this writ petition is disposed of clarifying that the petitioner will be entitled to duty credit for the goods imported under Exts. P9 to P15 and the Bank guarantees furnished by the petitioner will be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Holiday Resorts (P) Ltd, 2010 (256) ELT 433 (Tri-Mum.). The said judgment was rendered in a totally different context, inasmuch as there was violation of the actual user condition and the main issue was whether the Customs Authorities were empowered to take action for violation of conditions of the Exemption notification before the completion of the export obligation period without concurrence of DGFT. In that case, unlike the instant case, the vehicle (Ferrari car) imported for resort in Kerala was always at Bangalore, and was never used in Kerala for rendering services to tourists visiting Kerala. Moreover the vehicle was transferred by registering as a private vehicle in the name of the- Managing Director of the appellant therein from earlier registration in Trivandrum as a tourist vehicle. In view of the above findings, this judgment is not applicable in the facts of the instant case. 28. The appellant has also raised the issue of erroneous rejection of the request for mandatory examination of witnesses as prescribed under section 138B of the Customs Act, 1962 on the issue of the relevancy of statements in the adjudication proceedings. However in view of the above findings ..... X X X X Extracts X X X X X X X X Extracts X X X X
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