Tribunal validates DGFT's post facto approval, dismisses Customs appeal challenging procedural lapses in EPCG scheme by Hyundai Motor India Limited.
In a significant ruling, the Customs Excise and Service Tax Appellate Tribunal (CESTAT) in Chennai has upheld the duty exemptions availed by M/s. Hyundai Motor India Limited under the Export Promotion Capital Goods (EPCG) Scheme. The case revolved around allegations of procedural lapses, where capital goods were allegedly diverted to unauthorized premises without proper endorsements on EPCG licenses.
The Tribunal, comprising Mr. M. Ajit Kumar, Member (Technical), and Mr. Ajayan T.V, Member (Judicial), dismissed the appeal by the Commissioner of Customs, confirming the post facto approvals granted by the Directorate General of Foreign Trade (DGFT). The Tribunal found that the substantial conditions of the EPCG Scheme, namely the fulfillment of export obligations, were met by Hyundai, thereby justifying the procedural regularizations by DGFT.
The Tribunal noted that the DGFT's post facto approvals, which included the inclusion of job worker premises as installation sites for imported capital goods, were sufficient to address the procedural lapses. The decision emphasized the principle that notifications under the Customs Act should align with the overarching objectives of the Foreign Trade Policy and the FTDR Act.
The Tribunal also highlighted the previous acceptance of similar post facto approvals by customs authorities, reinforcing the stance that substantial compliance, rather than mere procedural adherence, is crucial for sustaining duty exemptions.
The ruling comes as a relief to Hyundai, which had fulfilled more than 200% of its export obligations under the EPCG authorizations. The Tribunal's decision underscores the importance of coordination between different government departments in implementing trade policies and schemes, ensuring that procedural lapses do not overshadow substantive compliance.
This judgment sets a significant precedent for future cases involving procedural deviations under similar trade facilitation schemes, reiterating that duty exemptions cannot be denied when the core objectives of the scheme are met.
Bottom Line:
Customs Law - EPCG Scheme - Post facto approval granted by DGFT for inclusion of job worker premises as installation place of imported capital goods under EPCG Scheme - Substantial compliance of notification conditions upheld - Procedural violations regularized, duty exemption sustained.
Statutory provision(s): Customs Act, 1962 Section 111(o), Section 112, Section 114AA, Section 114A
