Custom, Excise & Service Tax Tribunal
M/S Goldfinch Hotels P. Ltd vs Commissioner Of Customs (Acc & Exports) on 27 March, 2015
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
Appeal No.
C/85309, 85310, 85358/15
- Mum
(Arising out Order-in-Original No. CAO/CC/AKG/03/2014 ADJN(X), ACC dated 05.11.2014 passed by the Commissioner of Customs (ACC), Mumbai)
For approval and signature:
Honble Mr. M.V. Ravindran, Member (Judicial)
Honble Mr. P.S. Pruthi, Member (Technical)
1. Whether Press Reporters may be allowed to see No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy Seen
of the Order?
4. Whether Order is to be circulated to the Departmental Yes
authorities?
M/s Goldfinch Hotels P. Ltd.
Prakash K. Shetty
Appellant
Vs.
Commissioner of Customs (ACC & Exports),
Mumbai
Respondent
Commissioner of Customs (ACC & Exports),
Mumbai
Appellant
Vs.
M/s Goldfinch Hotels P. Ltd.
Prakash K. Shetty
Respondent
Appearance:
Shri Prasad Paranjape, Advocate for the appellant
Shri A.K. Singh, Addl.Comm.(AR) for the respondent
CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial)
Honble Mr. P.S. Pruthi, Member (Technical)
Date of hearing : 27/03/2015
Date of decision : 27/03/2015
O R D E R No:..
Per: M.V. Ravindran:
1. These two appeals are concerning alleged violation of Export Promotion Capital Goods (EPCG) Scheme in import of vehicle. The benefits of exemption from payment of Customs Duty under the EPCG Scheme were introduced by the Central Government by notifying the Foreign Trade Policy (FTP). The procedure for its implementation is contained in the Handbook of Procedures (HBP) published by way of a Public Notice issued by the Director General of Foreign Trade (DGFT). Exemption Notification No.103/2009-Cus dated 11.09.2009 is issued for implementing the said Policy. Revenue is also in appeal against the impugned order. Accordingly, we dispose of all the three appeals by a common order.
2. On 29.09.2010, EPCG Licence No.0330027356 was issued to the Appellant Company, 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 and recording of statements. The vehicle was seized from the residential premises of Shri Prakash Shetty, Chairman and Managing Director of the Appellant Company, which is a private limited company. It is the case of the Department that the Appellant Company had no intention to abide by the conditions of the EPCG license, Exemption Notification No.103/2009-Cus dated 11.09.2009, and the Bond, and thus exemption was wrongly availed. The investigations culminated with issuance of a show cause notice.
5. The Show Cause notice alleges suppression, collusion and mala fide intention in importing the vehicle only for personal use of Shri Prakash Shetty, the Chairman & Managing Director (CMD) of the Appellant Company. For upholding the said allegation the adjudication order seeks to draw inference from statements of Shri Vinay Kumar, Chief Security Officer, Shri Bhaskar V.S., General Manager (Finance), Shri S.M. Doss, General Manager, Shri Zaheer Ahmed, Front Office Manager, Shri Basavaraju, Driver, Shri Vijayath Babu, Cook and Shri Prakash Shetty, the CMD of M/s. Goldfinch Hotels Pvt. Ltd. The Learned Departmental Representative heavily relied on these statements to point out that the vehicle was parked at the residence of the CMD of the Appellant Company, no log book was maintained for the movement of the vehicle, the fuel expenses were borne in cash by the CMD, Driver Shri Basavaraju was on the payroll of a holding company of the Appellant and the Driver had not attended to any foreign nationals for any pick-up from or drop at Airport, or any other trip. He submitted that statements of various persons were confirming the allegations; all India Permit sign was not displayed on the car. According to him the transfer of registration from RTO Chitradurga to RTO Bangalore was a transaction of sale. The address of Chitradurga was not declared to the DGFT. The vehicle was not mentioned on the official website of the Appellant Company and that a Visitor Pass sticker, not connected to the Hotel, was found in the car. He submitted that in view of these the conditions of the EPCG license, FTP and the Exemption Notification were violated. There was no intention to abide by the EPCG scheme and thus according to him the Order-in-Original was just and proper.
6. On the other hand, the Learned Advocate appearing for the Appellants denied the allegations on the basis of the grounds 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. 12300000 Hotel & Tourism related services
worth US$ 2,298,954.68 i.e. 8 times the duty saved of Capital Goods on FOB basis within a period of 8 years (12 years in case duty saved is Rs. 100 Crore or more) from the date of issue of authorisation. The Export Obligation shall be fulfilled by the use of the Imported Capital Goods.
6. Import of Capital Goods under this authorisation shall be subject to actual user condition.
8. The CG is to be installed at the following address :
Name and Address of the Supporting Manufacturer
SI. No
Name
Address
Type Of Unit
Registration No.
Date
1.
M/s. Goldfinch Hotels Pvt. Ltd.
32/3, Crescent road, High grounds, Off. Race course Road, Bangalore 560001
Others
AABCG8416AST001
28.01.2005
"9. This Authorisation will be operative as per provisions of the Foreign Trade Policy and Hand Book of Procedures 2009-2014 or any other law / provision time being in force.
3. Relevant provisions of Foreign Trade Policy /HBP:
Para 5.2, 5.3 and 5.4 of Policy:
Concessional 3% Duty EPCG Scheme
5.2
.
However, import of motor cars, sports utility vehicles/all purpose vehicles shall be allowed only to hotels, travel agents, tour operators or tour transport operators and companies owning/operating golf resorts, subject to the condition that:
(i) total foreign exchange earning from hotel, travel & tourism and golf tourism sectors in current and preceding three licensing years is Rs. 1 .5 crores or more.
(ii) duty saved amount on all EPCG Authorizations issued in a licensing year for import of motor cars, sports utility vehicles/ all purpose vehicles shall not exceed 50% of average foreign exchange earnings from hotel, travel & tourism and golf tourism sectors in preceding three licensing years.
(iii) vehicles imported shall be so registered that the vehicle is used for tourist purpose only. A copy of the Registration certificate should be submitted to concerned RA as a confirmation of import of vehicle. However, parts of motor cars, sports utility vehicles/ all purpose 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 fulfill the export obligation over the specified period in 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
Every EPCG authorization holder shall maintain, for a period of 3 years from date of redemption, a true and proper account of exports/ supplies made and services rendered towards fulfillment of export obligation.
4. Relevant conditions of Exemption Notification 103/2009-Cus dated 11.9.2009
2.?The exemption under this notification shall be subject to the following conditions, namely :-
(1)?that the goods imported are covered by a valid authorization issued under the Export Promotion Capital Goods (EPCG) Scheme in terms of Chapter 5 of the Foreign Trade Policy permitting import of goods at the rate of three percent duty and the said authorization is produced for debit by the proper officer of customs at the time of clearance :
Provided further that the import of motor cars, sports utility vehicles or all purpose vehicles shall be allowed only to hotels, travel agents, tour operators or tour transport operators and companies owning or operating golf resorts, subject to the condition that,-
(i) the total foreign exchange earning from hotel, travel and tourism and golf tourism sectors in current and preceding three licensing years is rupees one crore fifty lakhs or more;
(ii) the duty saved amount on all EPCG authorizations issued in a licensing year for import of motor cars, sports utility vehicles or all purpose vehicles shall not exceed 50% of average foreign exchange earnings from hotel, travel and tourism and golf tourism sectors in preceding three licensing years; and
(iii) the vehicles imported shall be so registered that the vehicle is used for tourist purpose only and a copy of the registration certificate shall be submitted to the concerned Customs authorities as a confirmation of import of vehicle within six months from the date of import:
Provided also that the benefit of import of capital goods at concessional duty under this notification for creation of modern infrastructure shall be extended only to such retailers who have a minimum area of 1000 square metres.
(2)?that the goods imported shall not be disposed of or transferred by sale or lease or any other manner till export obligation is completed.
(3)?that the importer executes a bond in such form and for such sum and with such surety or security as may be specified by the Deputy Commissioner of Customs or Assistant 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 authorization, 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);
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(7)?that the capital goods imported, assembled or manufactured are installed in the importers factory or premises and a certificate from the jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be, is produced confirming installation and use of capital goods in the importer's factory or premises, within six months from the date of completion of imports or within such extended period as the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, may allow :
Provided that in case of import of spares, the installation certificate shall be produced within three years from the date of import:
Provided further that if the importer is not registered with central excise or if he is a service provider, as the case may be, he may produce the said certificate of installation and usage issued by an independent Chartered Engineer:
.
9. There is no dispute as to the fact that the Appellant Goldfinch Hotels Pvt. Ltd owns a Hotel and had earned the requisite foreign exchange by providing Hotel and Tourism related services for being eligible for obtaining EPCG licence. The annual average of such past export performance, on the basis of which the EPCG license was issued, is also not in dispute. As per condition 2 & 3 of the Condition Sheet, the obligation is to export Hotel & Tourism related services worth 8 times the duty saved, while maintaining the average of the past three years export performance of the same and similar Hotel and Tourism related services. As per the condition (3) of Para 2 of the Notification No.103/2009-Cus dated 11.09.2009, the Appellant has to complete the Export Obligation within total 8 years, and first 50% of the export obligation is required to be completed in the Block of 6 years. The vehicle was seized on 23.05.2013 i.e. within 2 = years from the date of import under EPCG Scheme. Neither the appellants claim of having fully discharged the Export Obligation, nor have they applied for issuance of any Export Obligation Discharge Certificate.
10. It is undisputed position that the vehicle imported under the EPCG license was registered only for Tourist Purpose in the name of the Appellant Company which admittedly provides Hotel and Tourism related Services. There is no finding against the Appellants that the registration documents showing registration only for Tourist purpose 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 is no condition stipulating to park the vehicle imported under EPCG scheme at 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. The said seized vehicle was provisionally released by the adjudicating authority to the Appellant Company against bank guarantee of Rs.1,25,53,394/-, which was reduced by the Hon'ble High Court of Karnataka, vide Order dated 09.10.2013 to Rs.75 lakhs, and was furnished on 14.10.2013. This provisional release granted to the Appellant Company before issuance of the show cause notice also indicates that the department is satisfied regarding ownership of the seized vehicle still vested with the Appellant Company. 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.
14. Though in the instant appeals neither investigations are under challenge nor any validity of certificate of completion of export obligation is in issue, the following observations of the Honble Delhi High Court in a case relating to import of vehicles under EPCG scheme, vide judgment dated 17.01.2006 in Interglobe Enterprises Ltd vs. Union of India, 2006 (203) ELT 202 (Del.), are vital-
12.. The true position appears to us to be that while capital goods may or may not be capable of generating convertible foreign exchange by their independent use as is the position in the case of the lift in a hotel or the cars imported by the travel agent, the least that the 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 lines, 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 regards 2nd issue at 2(ii) above, in the working of hotel, tourism and travel service industry the vehicles are part of an overall package drawn by these service providers for the tourists. This package may include hotel accommodation, food, beverages and travel cost and charges for utilizing imported vehicles would not be billed separately to the tourist. It is therefore not practically possible for these sectors to show export earnings separately from use of these vehicles. Therefore, the views expressed by the DRI on this score cannot be accepted and all benefits including all earnings for providing hotel accommodation, sale of food and beverages apart from transportation of the tourist, should be considered towards discharge of export obligation against vehicles imported under EPCG scheme. This is however subject to the condition that no part of the sale proceeds have been paid in free foreign exchange to any other service provider for providing add on services for hotel accommodation etc. (Emphasis ours) Thereafter, the Honble Delhi High Court while relying upon the precedent in Interglobe Enterprises Ltd (supra), in Commissioner of Customs vs. Air Travel Bureau Ltd, 2010 (260) ELT 78 (Del.) in another case relating to import of vehicles under EPCG scheme, dismissed the appeal of the department and has held that-
2.?It is found as a matter of fact that the respondents are in the business of travel agency and the cars were utilized for the intended purposes i.e. they were added attraction for the foreign tourists to come to India and the respondents rendered the services of arranging/booking air and train tickets, accommodation, site-seeing and booking train tickets etc. Without these services, rendered by the respondents, incremental foreign exchange earnings could not have been achieved. Another finding of fact which is recorded by the Tribunal is that it has not been shown before the Tribunal that the imported vehicles had been used for any purpose other than those related to travel and tour as stipulated in EPCG license. On this basis, the Tribunal opined that the term tour and travel is a very wide term and it cannot be said that the EPCG license envisaged only the amounts collected by use of imported cars to be accounted towards export obligation under the said license.
3.?Thrust of the reasoning given by the Tribunal is that if with 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 Honble Supreme Court on 18.4.2011, as reported in 2011 (268) ELT A110 (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 and Tourism related services. The vehicle is accordingly registered for Tourist purpose in the name of the Appellant Company owning a Hotel in State of Karnataka at Bangalore. In view of the above binding precedents in Interglobe Enterprises Ltd (supra), Air Travel Bureau Ltd (supra) and the clarification from the office of DGFT, it is not mandatory that the Hotel of the Appellant Company should have charged separately for the use of the vehicle to collect money in foreign exchange specifically under the head of transportation charges with separate accounting of the same.
16. The essential requirement is that the vehicle shall be an added attraction for the foreign tourist and/or shall be put to use for the business activity for which the same was imported. Whereas it is alleged that the guests for whom the vehicle was provided were personal guests of the CMD, it is claim of the appellant company that the guests are VVIPs for the companys business activities, which is Hotel and Tourism related services.
17. We find that when the vehicle was seized, neither the period for completion of Export Obligation had expired, nor any proceedings were initiated against the appellant by DGFT for non-fulfilment of Export Obligation or for any failure in submission of any mandatory details prescribed by DGFT by way of any Public Notice. There is no statutory requirement for maintaining any particular form of accounts/log book for day to day activity. In the absence of any positive evidence to show the abuse, when the substantial period for completion of export obligation is still pending, it cannot be presumed that there was never any intention to use the vehicle for providing services. DGFT has not cancelled the EPCG license by giving any finding of fraud or mis-representation in obtaining the EPCG License.
18. Regarding other allegations it is seen that the CMD Shri Prakash Shetty stated that the special unleaded petrol was available only at a particular petrol station and hence he was getting the fuel from that place. It is not disputed that the Appellant Company which is owning the hotel is a private limited company where the majority shares are held by another private limited company along with the family members of the CMD. Substantial shares of the second private limited company are again held by the family of the CMD. Hence, we find merit in the 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 the Rolls Royce is used for ferrying only VVIP guests, and in this regard CMD informs the front office or the driver directly. The Driver whose statement was recorded has been driving four different vehicles and was not kept to exclusively drive the subject vehicle. He admits having attended to in-house guests, and that since there is no safe and sufficient parking at Hotel, the Rolls Royce car is parked at the residence of the CMD and sometimes at the premises of Hotel. This driver cannot be presumed to be competent to identify the nationality of the guests. Guests of Indian origin from Asian countries do not look different from resident Indians. Further, the non-resident Indians are also bound to spend in foreign exchange during the short periods of stay in India. Hence no conclusive inference can be derived from the version of the driver.
20. Further, the CMD Shri Prakash K Shetty, in his statement dated 24.05.2013 inter alia, stated that the Rolls Royce Ghost car is used for ferrying of the hotel guests and also for the use of the Chairman for business promotion. They are not charging the guests for the use of the Rolls Royce car which is a part of complimentary package for the guests. He also informed that some guests who used the Rolls Royce car are people like consultants, architects, etc. who do stay in the hotel, but visit for the purpose of up-gradation of the hotel, and that he authorizes the use of the Rolls Royce car by informing the front office or the driver. On a specific query, the CMD in his statement dated 27.05.2013 has denied that no foreign exchange was earned by providing the vehicle and had stated that - In the last 2 years 2011-12 and 2012-13 we have earned foreign currency to the tune of Rs. 2,62,56,060/- which is the earning earned as part of the packages offered to foreign guests. While concluding the said statement he has categorically stated that- I would like to reiterate that the Rolls Royce Car is being used only by the room guests and for the use of the Chairman for the promotion of business for Goldfinch Hotel.
21. In view of these averments contained in the statements relied upon in the show cause notice, it cannot be said that the department has conclusively proved any sale or transfer of the vehicle or any misuse of the EPCG scheme by violating actual user condition. Even the allegation that the vehicle was 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 cannot 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 Company and for tourist purpose. It is also undisputed that the vehicle is neither registered in the name of the CMD of the Company, nor is there any allegation of such attempt.
24. We find that none of the statements contain any positive admission that the Appellant Company actually intended to import the car only for personal use of Shri Prakash Shetty. These statements and the records do not dispute the fact that after importation, the vehicle is actually registered in the name of Goldfinch Hotels Pvt. Ltd and for Tourist purpose only. None of these statements even remotely allege any sale or transfer of the vehicle to any other person or entity, and moreover the registration with RTO stands in the name of the Appellant Company. 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 VVIP 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.
25. It is settled law as held by the Honble Supreme Court in Vadilal Chemicals Ltd vs. State of Andhra Pradesh, 2005 (192) E.L.T. 33 (S.C.) that the State, which is represented by the Departments, can only speak with one voice. The Honble Supreme Court observed thus-
23. There is another reason why the action of the DCCT cannot be upheld. The primary facts relating to the processes undertaken by the appellant at its unit were known to the Department of Industries and Commerce and the DCCT. The only question was what was the proper conclusion to be drawn from these. The Department of Industries and Commerce which was responsible for the issuance of the 1993 G.O. accepted the appellant as an eligible industry for the benefits. Apart from the fact that it can be assumed that the Department of Industries was in the best position to construe its own order, we can also assume that in framing the scheme and granting eligibility to the appellant all the Departments of the State Government involved in the process had been duly consulted. The State, which 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 provisions of the Customs Act, 1962. It is seen that the Ministry of Commerce which was responsible for the issuance of the Foreign Trade Policy was in the best position to construe its own provisions, Public Notices and the Policy Circulars. It is to be presumed that while formulating the Foreign Trade Policy even the Departments of Revenue must have been duly consulted. Therefore, with regard to the language used in Para 2.4 of the Foreign Trade Policy, it is the view expressed by the Ministry of Commerce, which must be taken to be that voice. Para 2.4 of the FTP reads thus-
Procedure 2.4 DGFT may, specify procedure to be followed for an exporter or importer or by any licensing or any other competent authority for purpose of implementing provisions of FT (D&R) Act, the Rules and the Orders made there under and FTP. Such procedures shall be published by means of a Public Notice, and may, in like manner, be amended from time to time. It is evident from the above provision of the FTP issued by Central Government by way of a Notification in the Official Gazette, that an exporter or importer or any licensing or any other competent authority (which shall necessarily include the officers of Ministry of Finance/Customs Authorities), would be bound by the procedure specified by DGFT for implementing the provisions of FT (D&R) Act, the Rules, the Orders made thereunder and FTP, published by means of a Public Notice. Thus all procedural aspects whether or not notified by the Ministry of Finance, if contrary to what is specified in Public Notice / Handbook of Procedure, would give way to those specified in the Public Notice. The obvious reason for such a provision in the FTP is that the benefits conferred and promised under the FTP issued under FTDR Act cannot be denied either in view of the absence of any Notification or any contrary or ambiguous Notification or Circular issued under the Customs Act, 1962. If the Central Government in its wisdom introduces a beneficial scheme or provision under the FTDR Act, the benefit of such legislation are to be made available by another Department of Central Government namely the Customs Department for which purpose Notifications and Circulars are issued under the Customs Act, 1962. Neither such Notifications and Circulars can be interpreted to take away the benefit which is otherwise available under the FTP and 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) ELT158 (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 Honble 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. P17 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 returned. It is also declared that the petitioner will be entitled to the benefit of the balance amount of duty credit certified under Exts. P5 to P5(d) and Ext. P6 licence as well.
5. True, the counsel for the department raised an objection that in the absence of a notification issued by the Customs as a consequence of Exts. P17 and P18, the benefit cannot be claimed at this stage. However, having regard to the fact that the Government of India have issued Exts. P17 and P18, I do not think it will be reasonable to require the petitioner to wait until any notification is issued by the Customs Department to get the benefit. Therefore, there is no substance in this objection.
26. 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 capital goods in whatever way he considers best to earn the incremental foreign exchange. The main requirements are that the required incremental foreign exchange be earned in a specified period; the imported vehicle shall be registered for tourist purpose only, and should not be sold or transferred. The Department has not produced any tangible evidence to prove that the actual user condition has been violated or the vehicle has been sold / transferred. In any case foreign guests staying in hotels do not pay separately for their travel and the Appellant Company claims to provide complementary facility to their VVIP guests, which is not disproved by the department. The vehicle has not been sold or transferred to any other person by the importer. It is not proved even on preponderance of probability that the vehicle was imported solely for personal use of the CMD of the Hotel. In these circumstances, we find that even if the mandatory conditions of Exemption Notification are construed strictly, there is no violation of any condition of the EPCG license, FTP or the Customs Notification.
27. We have also perused the judgment of this Tribunal in Surya Samudra 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 we find no need to consider the said issue.
29. No violation of any condition of the EPCG license, FTP and the Exemption Notification is thus proved. Neither any demand of duty can therefore sustain, nor is any case for confiscation or imposition of penalty thus made out. The impugned Order-in-Original is therefore erroneous and is set aside.
30. As we have set aside the impugned order on merits in favour of appellant assessee, the appeal filed by the department for enhancement of penalty also does not survive. The revenues appeal is dismissed.
31. Both the appeals are accordingly allowed with consequential reliefs.
(Operative part pronounced in Court) (P.S. Pruthi) (M.V. Ravindran) Member (Technical) Member (Judicial) //SR 2