Exemption benefits under the EPCG scheme cannot be denied based on the vintage of second-hand machinery if the relevant exemption notification does not prescribe a specific restriction on the year of manufacture and export obligations are fulfilled.

PER: S.K. MOHANTY

Heard both sides and examined the case records.

2. The appellant M/s. Puja Synthetics Pvt. Ltd. had imported the second-hand textile machinery and availed the exemption benefit provided under Notification No. 97/2004-Cus., dated 17.09.2004. For availment of the benefit provided under the notification dated 17.09.2004, the said appellant had obtained the EPCG authorization from Director General of Foreign Trade (DGFT) and imported the goods by filing the Bills of Entry before the Customs authorities at the port of import. The imported goods were physically examined and cleared by customs department by extending the EPCG benefit provided under the notification dated 17.09.2004. However, on further investigation into the matter, the department had gathered the information that the imported second-hand machinery was beyond the permissible vintage of 10 years, and since the EPCG authorization was required to be read along with the Technology Upgradation Fund (TUF) Scheme, the subject goods were not eligible for the EPCG benefit. On the basis of such understanding, show cause proceedings were initiated against the appellants, which culminated into the adjudication order dated 23.07.2014, wherein the original authority had denied the benefit of the said notification and confirmed the duty liability along with interest and also imposed penalties on the appellants, as proposed for in the show cause notice dated 30.04.2013. On appeal against the said adjudication order dated 23.07.2014, learned Commissioner (Appeals) vide the impugned order dated 30.10.2015 has upheld confirmation of the adjudged demands and rejected the appeal filed by the appellant. Further, the impugned order has also imposed penalty on the other appellant Shri Sharad Kabra, who is the Director of the appellant company. Feeling aggrieved with the impugned order, the appellants have preferred these appeals before the Tribunal.

3. Notification No. 97/2004-Cus., dated 17.09.2004 exempts the capital goods from payment of customs duty and the additional duty of customs, when imported into India under the Export Promotion Capital Goods (EPCG) Scheme. It is an admitted fact on record, that the appellants had imported the goods under the EPCG Scheme, and duly approved by the DGFT in the authorization letter dated 25.04.2008 issued to them. Further, it is not the case of Revenue that the appellants did not comply with the requirement provided under the said notification dated 17.09.2004. We find that no concrete evidences were provided by the department to substantiate their claim that the machineries were more than 10 years old. Further, nowhere in the said notification, there is any condition prescribed with regard to the year of manufacture of the second-hand machinery. On perusal of the case records, we find that the DGFT vide letter dated 10.09.2018, had redeemed the EPCG license issued to the appellants on fulfilment of the export obligation by them. Since, the second-hand machinery were purchased by availing the benefit of the exemption notification dated 17.09.2004 and the export obligation were duly achieved by them upon utilizing such machinery, we are of the view, that the requirement of the EPCG scheme has been duly complied with by the appellants. Therefore, we are of the considered opinion that the adjudged demands confirmed against the appellants cannot be sustained. Further, we also find that based on the same investigation, proceedings were initiated by the customs department against the other importers and some of the importers had assailed the adjudication order by way of filing the appeals before the Delhi Bench of th