Custom, Excise & Service Tax Tribunal
Rohit Kumar Chartered Enginner vs New Delhi(Prev) on 4 November, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. I
CUSTOMS APPEAL NO. 4120 OF 2012
(Arising out of Order-in-Original No. 24/SU/Commr./2012 dated 26.09.2012 passed by
the Commissioner of Customs (Preventive), New Delhi)
Shri Rohit Kumar ....Appellant
Chartered Engineer
R/o C-504
Ashiyana Apartment,
Mayur Vihar, Ph-I, New Delhi-110091
VERSUS
Commissioner of Customs, ....Respondent
New Customs House, Near IGI airport, New Delhi APPEARANCE:
Ms. Priya Pnadey, Advocate for the Appellant Shri Nikhil Mohal Goyal, Authorized Representative for the Department CORAM: HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) DATE OF HEARING/ DECISION: 04.11.2025 FINAL ORDER NO. 51679/2025 JUSTICE DILIP GUPTA:
Rohit Kumar1, a Chartered Engineer, has filed this appeal to assail that portion of the order passed by the Commissioner (Preventive) that imposes a penalty of Rs. 10 lacs on the appellant under section 112(a) of the Customs Act 19622.
2. It transpires from the record that M/s. Bestech Hospitalities Pvt. Ltd.3 was engaged in the business of running hotels. It imported two
1. the appellant
2. the Customs Act
3. Bestech Hospitalities 2 C/4120/2012 BMW cars and claimed benefit of Notification No. 97/2004-Cus. dated 17.09.20144 in terms of EPCG Scheme. The cars were imported for the purpose of rendering services to foreign guests staying at Hotel Park Plaza, Gurgaon, owned by it at the relevant time so as to earn foreign exchange through the services rendered with the help of such cars.
3. Bestech Hospitalities claims to have fulfilled the export obligation contemplated under the Notification and applied for grant of Export Obligation Discharge Certificate5 before the Directorate General of Foreign Trade6. The DGFT issued the EODC on 30.06.2008. It also claims that proceedings were not initiated by the DGFT against it for cancellation of EODC.
4. Around September/October, 2009, an investigation was conducted by the preventive wing of the department which concluded that the two cars imported by Bestech Hospitalities under the EPCG scheme were not used for transport of foreign guests or Non-Resident Indians, but were used for personal use by the two Directors.
5. Accordingly, a show cause notice dated 17.02.2012 was issued by the Commissioner (Preventive) proposing to confiscate the two cars and deny the benefit of the concession rate of duty under the Notification. The show cause notice also proposed imposition of penalty upon Bestech Hospitalities and on the two Directors. A Corrigendum/Addendum dated 18.04.2012 was also issued to the show cause notice proposing to impose penalty upon the appellant under section 112(a) of the Customs Act.
4. the Notification
5. EODC
6. DGFT 3 C/4120/2012
6. The impugned order has confiscated the two cars, imposed duty and penalties upon Bestech Hospitalities. Penalties have also been imposed on the two Directors and the appellant.
7. It needs to be noted that Bestech Hospitalities filed Customs Appeal No. 55309 of 2013 to assail the aforesaid order passed by the Commissioner (Preventive) against confiscation of the two cars and imposition of duty and penalty. The two Directors also filed Customs Appeal No. 55310 of 2013 and Customs Appeal No. 55311 of 2013 to assail imposition of penalties upon them.
8. The appellant also filed the present Customs Appeal No. 4120 of 2012. The aforesaid three appeals filed by Bestech Hospitalities and the two Directors were decided by this Tribunal by a common order dated 05.08.2025. The order passed by the Commissioner (Preventive) was set aside and the appeals were allowed. The relevant portions of the order dated 05.08.2025 passed by the Tribunal are reproduced below:
"14. The dispute centers around the benefit of the Notification claimed by the appellant in respect of the two imported BMW cars through two Bills of Entry, both dated 16.02.2006. The imports were made under the EPCG Scheme. The benefit has been denied to the appellant for the reason that the export obligation contemplated under the Notification was not fulfilled since the cars were not used for the intended purpose.
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18. After the appellant had fulfilled the export obligation as per the provision of the EXIM Policy Handbook Procedure, the Foreign Trade Development Officer issued a certificate of discharge of export obligation against Licence dated 07.02.2008 on 30.06.2008.
xxxxxxxx 4 C/4120/2012
19. The issue that arises for consideration in these appeals is whether the demand could be confirmed with consequent penalties for violation of the conditions of the Notification, when the EODC was issued in favour of the appellant evidencing fulfilment of export obligation and it has not been cancelled till date.
20. The first submission that has been advanced by the learned counsel for the appellant is that since that export obligation had been fulfilled by the appellant within the time granted by the DGFT and EODC was issued and received by the appellant, duty could not have been demanded from the appellant when proceedings had not been initiated by DGFT against the appellant for cancelling the EODC. The contention, therefore, that has been advanced is that 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.
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24. It is not in dispute that EODC had been issued to the appellant by DGFT on 30.06.2008. It is also not in dispute that the said EODC has not been cancelled till date by DGFT."
(emphasis supplied)
9. The division bench, thereafter, placed reliance upon the judgment of the Supreme Court in Titan Medical Systems Pvt. Ltd. vs. Collector of Customs, New Delhi7 which was followed by the Delhi High Court in Design Co. & Ors vs. Union of India & Ors8 to hold that the demand could not have been confirmed.
10. In Titan Medical Systems the Supreme Court observed that once a licence was issued and it was not questioned by the licencing
7. 2003 (151) E.L.T. 254 (S.C.)
8. W.P.(C) 14477/2022 decided on 22.11.2024 5 C/4120/2012 authority, the customs authorities cannot refuse exemption on an allegation that there was mis-representation. The Supreme Court further observed that if there was any mis-representation, it was for the licencing authority to examine and take steps.
11. In Design Co. the Delhi High Court held that it would be wholly impermissible for the customs authorities to ignore the MIES certificate or deprive holder of the said certificate of the benefits that can be claimed in the scheme, absent any adjudication or declaration of invalidity by the DGFT. The Delhi High Court further held that there cannot be a parallel or a contemporaneous power inhering in two separate sets of authorities with respect to the same subject. If an instrument owes its origin to the FTDR Act, than it is the DGFT which will have to inquire and any action for recovery of benefits claimed and availed would have to necessarily be preceded by the component authority and under the FTDR Act. The Delhi High Court further held that Customs authorities would not have the jurisdiction to question the validity of a certificate referable to the FTDR Act.
12. The Division Bench ultimately in the order dated 05.08.2025 held:
"27. In this view of the matter, the customs authority could not have confirmed the demand in the absence of any adjudication by the DGFT cancelling the EODC certificate earlier issued by it certifying that the export obligation had been fulfilled by the appellant. The Customs department would, therefore, not have any jurisdiction to sit in judgment over the EODC issued by the DGFT."
(emphasis supplied)
13. The Division Bench also examined whether statements under section 108 of the Customs Act could be relied upon if the procedure 6 C/4120/2012 contemplated under section 138B of the Customs Act was not followed. After placing reliance upon certain decisions of the Tribunal, the Division Bench held that the Commissioner (Preventive) was not justified in placing reliance on the statements made under section 108 of the Customs Act for arriving at a conclusion that the provisions of the Notification had been violated. The relevant portion of the order of the Division Bench is reproduced below:
"32. In view of the aforesaid decisions of the Tribunal, the Commissioner (Preventive) was not justified in considering the statements made under section 108 of the Customs Act as relevant for coming to a conclusion that the provisions of the Notification had been violated."
14. The Division Bench ultimately held that penalty under section 112(a) of the Customs Act could also not have been imposed upon Bestech Hospitalities or the two Directors.
15. It has, therefore, been submitted by Ms. Priya Pandey, learned counsel appearing for the appellant that the imposition of penalty upon the appellant, who is a Chartered Accountant, and who had issued the certificate in respect to BMW cars which were imported under EPCG scheme by Bestech Hospitalities should also be set aside.
16. As noticed above, initially the show cause notice was not issued to the appellant and it was only by a Corrigendum/Addendum to the show cause notice dated 18.04.2012 that the appellant was also required to show cause as to why penalty should not be imposed upon him under section 112(a) of the Customs Act. The allegations made against the appellant in the Corrigendum/Addendum is:
"Mr. Rohit Kumar, Chartered Engineer had issued the Installation / Utilization Certificates in respect of two BMW 7 C/4120/2012 imported Cars having Registration. Nos. HR 26 AC 9113 and HR 26 AC 8822. In his statements dt. 29.9.2011 and 3.10.2011 Mr. Rohit Kumar admitted that he had not gone through the conditions of EPCG Licence, while issuing the utilization/installation certificates; that the two certificates nos. 97/1/RK an 97/2/RK dt. NIL issued in respect of import of two BMW Cars having Registration Nos. HR 26 AC 9119 and HR 26 AC 8822. Both the certificates were issued without following proper procedure and verifying the documents and the Chartered Engineer has knowingly and intentionally issued the certificate which resulted in evasion of customs duty amounting to Rs. 6700882. These certificates were issued in violation of conditions laid down in EPCG Licence and the requirements of utilization, installation and uses. Thus by this act of omission and commission, Mr. Rohit Kumar, Chartered Engineer has aided the abetment of the evasion of duty done by M/s. Bestech Hospitalities Pvt. Ltd. and thus, appears to have rendered himself and his company i.e. (i) Mr. Rohit Kumar S/o Sh. Amar Nath R/o C-504, Ashiana Apartments, Mayur Vihar, Phase-I, Delhi- 110091, Proprietor of M/s. Er. Rohit Kumar and; (ii) M/s Er. Rohit Kumar Chartered Engineer UB-31, Indra Prakash, 21, Barakhamba Road, New Delhi-110001 liable to penalty under Section 112(a) of the Customs Act, 1962."
(emphasis supplied)
17. It would be seen from the aforesaid portion of the show cause notice that the statements made by the appellant under section 108 of the Customs Act on 29.09.2011 and 03.10.2011 have been relied upon. These statements could not have been considered as relevant as the procedure completed under section 138B of the Customs Act had not been followed.
18. This apart, the appellant was only required to issue the issue certificate with regard to the installation of the goods and not with regard to the use of the goods. Further, once the confiscation of the two 8 C/4120/2012 imported BMW cars for having violated the terms and confirmation of demand has been set aside and the penalty upon Bestech Hospitalities and on the two Directors has also been set aside, the imposition of penalty upon the appellant cannot be sustained.
19. Thus, for all the reasons stated above, the impugned order imposing penalty upon the appellant under section 112(a) of the Customs Act cannot be sustained and is set aside. The appeal is, accordingly, allowed.
(JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) Jyoti