Custom, Excise & Service Tax Tribunal
Mohan Breweries And Distilleries Ltd vs Commissioner Of Customs - Chennai Ii ... on 8 August, 2025
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL,
CHENNAI
REGIONAL BENCH - COURT NO. I
Customs Appeal No. 41052 of 2015
(Arising out ofOrder-in-AppealC.Cus.No.196/2014, dated 20.11. 2014 passed by the Commissioner
of Customs (Appeals - II), 60 Rajaji Salai, Custom House, Chennai 600 001)
M/s. Mohan Breweries & Distilleries Ltd. .....Appellant
Southern India Film Chamber of Commerce
(New Building) Phase - I, 3rd floor
No.605 & 606, T. R. Sundaram Avene
Thousand Lights, Chennai 600 006
Versus
Commissioner of Customs ...Respondent
Chennai II Import Commissionerate Custom House No.60, Rajaji Salai, Chennai 600 001 APPEARANCE:
Shri Abraham John Samuel A, Advocate for the Appellant Shri N. Satyanarayana, Authorised Representative for the Respondent CORAM:
HON'BLE MR. AJAYAN T.V, MEMBER (JUDICIAL) FINAL ORDER No.40806/2025 DATE OF HEARING: 04.08.2025 DATE OF DECISION: 08.08.2025 Per Mr. Ajayan T.V.
M/s. Mohan Breweries and Distilleries Ltd., the appellant herein has called into question the Order in Appeal C.Cus. II No. 196/2014 dated 20.11.2014 passed by the Commissioner of Customs (Appeals-II), Chennai, whereby the Appellate Authority has refused the appellant's request to transfer the matter to call book until they received the EODC, and has directed the department to recover the amount by all coercive means legally available.2
2. Briefly stated, the facts are that the appellant was issued with an EPCG licence No.0430001490 dated 22.01.2004 by the JDGFT, Chennai for the import of capital goods in terms of Customs Notification No.55/2003 dated 01.04.2003. The appellant had availed the concessional rate of duty on the condition that they would fulfil the export obligation within the stipulated time prescribed by the said notification. The appellant had also executed a bond to this effect undertaking to pay the duty payable on demand along with applicable interest in case of failure to fulfil the export obligation. While executing the bond the appellant had undertaken to fulfil the export obligation equivalent to eight times of the duty saved amount within the period of eight years from the date of issue of licence. The Department, being of the view that the appellant had not produced any evidence showing the extent of export obligation fulfilled and had thereby breached the conditions of the notification and the bond executed, issued a demand cum Show Cause Notice dated 22.02.2012 demanding the duty along with applicable interest. Thereafter, the Adjudicating Authority passed the Order in Original no.24960/2014 dated 01.05.2014 rendering a finding that the appellant had breached the conditions of the notification and the bond executed and that the grace period of time extended to the appellant for submission of EODC had also lapsed. The Adjudicating authority therefore found the appellant liable to pay the duty of Rs.8,18,647/- for the goods imported and cleared against the EPCG scheme under the exemption notification along with interest at the appropriate rate for non-fulfilment of the notification condition. The Adjudicating Authority confirmed the demand of aforesaid duty along with applicable interest accordingly.
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3. Aggrieved by the said order in original, the appellant preferred an appeal before the Appellate Authority and informed the appellate authority, inter-alia, that the appellant had submitted the ANF - 5B statement of export for redemption of EPCG authorisation and revised statement detailing of annual average exports and is awaiting export obligation discharge certificate. The appellant therefore requested requesting the appellate authority to transfer the case to Call book. However, the Appellate Authority has passed the impugned order in appeal without acceding to their request. Aggrieved by the same, the appellant has preferred this appeal and is before this Tribunal.
4. Shri Abraham Jon Samuel, A. Advocate appeared on behalf of the appellant and reiterated the grounds of appeal which contended that the impugned order in appeal is not on merits and has been passed without appreciating that the appellant had in fact completed the export obligation within the stipulated time and had vide their letter dated 10.05.2012 applied for redemption of the said license with the Zonal Director General of Foreign Trade, Chennai. It was also contended that the Appellate Authority cannot find fault with the appellant for non-filing of EODC as it is beyond the control of the appellant. The Ld. Counsel submitted that they have now received a redemption letter issued from file no.04EEEPC00107AM26 dated 28.04.2025, which intimated that on the basis of documents submitted towards discharge of export obligation by the appellant it was observed that the export obligation stipulated in the Authorisation has been met in full in proportion to the duty amount utilised by the appellant and consequently, the export obligation has been discharged against the said authorisation in terms of para 5.13 of Handbook of procedures.
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5. Shri N. Satyanarayana, the Ld. Authorised Representative appeared on behalf of the Respondent and reiterated the findings in the order in appeal.
6. Heard both sides and perused the appeal records. I find that the order in original that has been passed denying the exemption and demanding duty is solely on the ground that evidence of export obligation fulfilment had not been produced. Now the Ld. Counsel appearing for the appellant has produced the redemption letter, prima facie showing that the export obligation has been discharged against the EPCG authorisation issued to the appellant. The appeal records reflect correspondence by the appellant intimating the Customs Department that they have already filed an application for redemption with the office of the JDGFT, under acknowledgement, the earliest of one such being their letter dated MBDL/ACCTS/2012 dated 04.06.2012 addressed the Customs Department. The appellant has submitted that the non- submission of EODC was for reasons beyond the control of the Appellant. The production of Export Obligation Discharge Certificate (EODC) in terms of EPCG scheme is all the more necessary for the importer to discharge the bond and redeem the bank guarantee executed if any, and to claim benefit under the said Scheme. It stands to reason that it is not in the interest of the appellant to delay the production of the Export Obligation Discharge Certificate (EODC). It is a settled position in law that a condition which hinges on an action by Government/Public authorities, over whom an assessee or importer cannot possibly exercise any control, and, if any delay is occasioned due to the inaction or delay in action on the part of such Government/Public authority, that cannot result in denial of the benefit of a Scheme or a notification which is 5 extended in larger public interest. The decision in Commissioner of Customs (Imports) v. Tullow India Operations Ltd., reported in (2005) 13 SCC 789 : 2005 (189) E.L.T. 401 (S.C) is an authority for the aforesaid proposition.
7. Furthermore, it is also seen that CBEC vide its instruction F.No.605/71/2015-DBK dated 14-10-2016, on the subject of "Rationalisation of procedures in handling exporters obligations under EPCG Authorisations" has inter-alia instructed as under:
"3B. On consultation, the DGFT has informed that the provisions of para 5.14 of HBP 2015-20 that provides "5.14(c)HBP : Where EO of the first block is not fulfilled in terms of the above proportions, except in cases where the EO prescribed for first block is extended by the Regional Authority subject to payment of composition fee of 2% on duty saved amount proportionate to unfulfilled portion of EO pertaining to the block, the Authorization holder shall, within 3 months from the expiry of the block, pay duties of customs (along with applicable interest as notified by DOR) proportionate to duty saved amount on total unfulfilled EO of the first block", and the similar provisions in previous FTP/HBP 2009-14 and 2004- 09 are strictly followed by Regional Authorities before issuing EODC/redemption/closure letters; and also that cases of condoning/delay in fulfilment of block-wise EO are considered by Regional Authorities only when exporter has obtained relaxation in terms of DGFT's powers under the FTP. The DGFT has also advised its Regional Authorities to ensure that these provisions are strictly followed in respect of all unredeemed EPCG authorization issued during the FTP 2004-09, 2009-14 and 2015-20. 3C. In the light of this, Board has decided that Customs authorities need not replicate the verification of export obligation of the first block that is being conducted by Regional Authorities and that the 6 EODCs received under EPCG Scheme in terms of FTP/HBP 2004-09, 2009-14 and 2015-20 be normally accepted without further verification, except in 5% cases where they be verified in detail before acceptance.
4. The foregoing aspects remain subject to detailed verification of EODC when there is such a need suggested by specific intelligence. Further, if Regional Authorities endorse verification of shipping bills/other documents on an EODC, such verification shall be carried out. Moreover, it remains mandatory to verify genuineness of non- EDI shipping bills/bills of export on which an EODC may be based.
5. The guidelines issued in the past on the subject shall be modified to the above extent. It should be noted that monitoring of progress of block-wise EO fulfilment is to continue and as clarified in Circular No. 14/2015-Cus. the field formations can view the EPCG authorization-wise all India export details in EDI.
6. The Commissioners are also directed to ensure transparent random selection criteria and selection for 5% check being made at least at Joint/Additional Commissioner level and the relevant exporter being invariably informed, on the date of selection itself, via official email communication that its case is selected for detailed checks. Credibility and transparency may be brought into the Bond cancellation process which may be made speedier. The exporter should not be asked to routinely produce information that can be sourced from the Customs EDI system.
7. The above aspects should be given publicity through issuing public notice. Standing order should be issued to suitably arrange the work and guide the personnel. The Chief Commissioners are requested to monitor the functioning on a monthly basis and ensure effective implementation." (emphasis supplied) 7
8. It is further noticed that CBEC vide Circular No.16/2017-Cus dated 02-05-2017 issued in F. No.605/85/2016-DBK, on the subject of "Monitoring of export obligation fulfilment under EPCG and Advance Authorization Schemes", has further instructed inter- alia, as under:
"3. The matter has been examined. It is noted that during the Chief Commissioner's Conference dated 08-09/01/2016, it has been decided that a simple notice will suffice to the licence/authorization holder who does not submit the EODC/Redemption letter within the period prescribed in the relevant Customs notifications. In these cases also, the principles of natural justice should be followed. Further, this was reiterated during the Chief Commissioner's Conference dated 3-1-2017 wherein it was agreed that in view of time taken by DGFT in issuance of EODC, the practice of issuance of SCN at the first stage itself may be replaced by issuance of a simple notice to defaulters.
4. In all Advance Authorization and EPCG notifications, the Deputy/Assistant Commissioners of Customs have power to extend the period to submit proof of fulfillment of EO without any limit. Thus there is inherent provision in Revenue notifications to keep action of Customs pending till EODC is issued by DGFT. Moreover, the process of issuance of EODC by DGFT itself is linked to submission of BRC by the licence holder. The BRC itself can be submitted as per the period allowed by RBI in terms of the Foreign Exchange Management Act, 1999. The licence/authorization is also subject to extension, if any, by DGFT. Hence, alignment of the time period given in Customs notifications with that given in FTP/HBP may not be required.
5. In view of the above, the field formations may issue simple notice to the licence/authorization holders for submission of proof of 8 discharge of export obligation. In case where the licence/authorization holder submits proof of their application having been submitted to DGFT, the matter may be kept in abeyance till the same is decided by DGFT. Institutional mechanism set up in terms of Instruction F. No. 609/119/2010-DBK dated 18-1-2011 for regular interaction with RA's of DGFT should be used to pursue such cases. However, in cases where the licence/authorization holder fails to submit proof of their application for EODC/Redemption Certificate, extension/clubbing etc., action for recovery may be initiated by enforcement of Bond/Bank Guarantee. In cases of fraud, outright evasion, etc., field formations shall continue to take necessary action in terms of the relevant provisions." (emphasis supplied).
9. The aforesaid instructions and Circular are binding on the Revenue.
Indisputably, the impugned orders of the lower authorities do not allege any fraud having been perpetrated by the appellant or that the appellant's case is that which has been taken up for scrutiny as per any administrative directions. Prima facie, the appellant has discharged the Export Obligation and has also furnished the requisite documents before the appropriate authority for issuance of Export Obligation Discharge Certificate (EODC), consequent to which presently the EODC/ redemption letter now stands issued to the appellant. Therefore, the delay in obtaining Export Obligation Discharge Certificate (EODC) cannot result in denial of benefit under the EPCG Scheme for such non production of EODC and neither can any demand of duty sustain to the importer's detriment. In my considered view, the impugned order in Appeal is therefore liable to be set aside as unsustainable. Ordered accordingly.9
10. However, the matter is remitted back to the adjudicating authority for the appellant to produce the EODC and for the limited purpose to enable the customs authorities to carry out the requisite verification, if any necessary, as per the instructions and circular cited above or any other prevailing instructions, and to grant the consequential benefits in law, if any. The adjudicating authority is directed to complete the denovo proceedings within a period of ninety days from the date of receipt of a copy of this order, duly adhering to the principles of natural justice.
11. The appeal is allowed by way of remand in the above terms.
(Order pronounced in open court on 08.08.2025) (AJAYAN T.V.) Member (Judicial) ra