Take notes as you read a judgment using our Virtual Legal Assistant and get email alerts whenever a new judgment matches your query (Query Alert Service). Try out our Premium Member services -- Free for one month.\n\nCustom, Excise & Service Tax Tribunal\nMagna Automotive India Pvt Ltd vs Commissioner Of Customs (Iv), Chennai on 2 November, 2023\n IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE\n                    TRIBUNAL,\n           SOUTH ZONAL BENCH, CHENNAI\n\n                           COURT HALL No. III\n\n\n\n            (1)    CUSTOMS APPEAL No. 41479 OF 2019\n\n(Arising out of Order-in-Original No.69637/2019 dt. 21.06.2019 passed by\nCommissioner of Customs, Chennai-IV, Custom House, No.60, Rajaji Salai,\nChennai 600 001)\n\nM/s.Ashok Leyland Limited                                ... Appellant\nNo.1, Sardar Patel Road,\nGuindy,\nChennai 600 032.\n\n\n   Versus\n\n\n\nThe Commissioner of Customs, Chennai-IV ... Respondent\nNo.60, Rajaji Salai,\nCustom House,\nChennai 600 001\n\n            (2)    CUSTOMS APPEAL No. 41486 OF 2019\n\n(Arising out of Order-in-Original No.69637/2019 dt. 21.06.2019 passed by\nCommissioner of Customs, Chennai-IV, Custom House, No.60, Rajaji Salai,\nChennai 600 001)\n\nM/s.Renault Nissan Automotive\nIndia Private Ltd.                                      ... Appellant\nPlot No.1, SIPCOT Industrial Park,\nOragadam, Mattur (Post),\nKanchipuram District - 602 105\n\n\n   Versus\n\n\n\nThe Commissioner of Customs, Chennai-IV ... Respondent\nNo.60, Rajaji Salai,\nCustom House,\nChennai 600 001\n\n            (3)    CUSTOMS APPEAL No. 41530 OF 2019\n\n(Arising out of Order-in-Original No.69637/2019 dt. 21.06.2019 passed by\nCommissioner of Customs, Chennai-IV, Custom House, No.60, Rajaji Salai,\nChennai 600 001)\n\nM/s.Gestamp Automotive\nChennai Private Limited                                 ... Appellant\nPlot No.B12, SIPCOT Industrial Park, Phase-II,\n                                       2\n\n\n\nVengadu Village, Pillaipakkam Post,\nSriperumbudur Taluk,\nKanchipuram District - 602 105\n\n\n   Versus\n\n\n\nThe Commissioner of Customs, Chennai-IV ... Respondent\nNo.60, Rajaji Salai,\nCustom House,\nChennai 600 001\n\n\n\n            (4)     CUSTOMS APPEAL No. 41531 OF 2019\n\n(Arising out of Order-in-Original No.69637/2019 dt. 21.06.2019 passed by\nCommissioner of Customs, Chennai-IV, Custom House, No.60, Rajaji Salai,\nChennai 600 001)\n\nM/s.Myoung Shin India\nAutomotive Private Limited                               ... Appellant\nNo.469/2, Mannur Village, Valarpuram,\nSriperumbudhur,\nKanchipuram District - 602 105.\n\n\n   Versus\n\n\n\nThe Commissioner of Customs, Chennai-IV ... Respondent\nNo.60, Rajaji Salai,\nCustom House,\nChennai 600 001\n\n              (5)      CUSTOMS APPEAL No. 41532 OF 2019\n\n(Arising out of Order-in-Original No.69637/2019 dt. 21.06.2019 passed by\nCommissioner of Customs, Chennai-IV, Custom House, No.60, Rajaji Salai,\nChennai 600 001)\n\nM/s.Daejoo Automotive\nIndia Private Limited                                  ... Appellant\nNo.134, Kilacherrypanchayettu,\nGovindamedu Village, Kilacheri,\nThiruvallur District - 631 402.\n\n\n   Versus\n\n\n\nThe Commissioner of Customs, Chennai-IV ... Respondent\nNo.60, Rajaji Salai,\nCustom House,\nChennai 600 001\n                                       3\n\n\n\n\n            (6)        CUSTOMS APPEAL No. 41568 OF 2019\n\n(Arising out of Order-in-Original No.69637/2019 dt. 21.06.2019 passed by\nCommissioner of Customs, Chennai-IV, Custom House, No.60, Rajaji Salai,\nChennai 600 001)\n\nM/s.MS Global India\nAutomotive Private Limited                                ... Appellant\nSurvey No.133 (Part), 134 (Part) & 135 (Part)\nSIPCOT Industrial Estate, Oragadam Village,\nSingaperumal Koil Road, Mattur (PO),\nSriperumbudur Taluk,\nKanchipuram District - 602 105\n\n\n   Versus\n\n\n\nThe Commissioner of Customs, Chennai-IV ... Respondent\nNo.60, Rajaji Salai,\nCustom House,\nChennai 600 001\n\n\n\n                (7)     CUSTOMS APPEAL No. 41569 OF 2019\n\n(Arising out of Order-in-Original No.69637/2019 dt. 21.06.2019 passed by\nCommissioner of Customs, Chennai-IV, Custom House, No.60, Rajaji Salai,\nChennai 600 001)\n\nM/s.Magna Automotive India\nPrivate Limited                                           ... Appellant\n(formerly known as Cosma International India Pvt. Ltd.)\nRNS-11, SIPCOT Industrial Growth Centre, Oragadam,\nVadakupattu, Sriperumbudur,\nKanchipuram District - 602 105\n\n\n   Versus\n\n\n\nThe Commissioner of Customs, Chennai-IV ... Respondent\nNo.60, Rajaji Salai,\nCustom House,\nChennai 600 001\n\n          (8)          CUSTOMS APPEAL No. 41570 OF 2019\n\n(Arising out of Order-in-Original No.69637/2019 dt. 21.06.2019 passed by\nCommissioner of Customs, Chennai-IV, Custom House, No.60, Rajaji Salai,\nChennai 600 001)\n\nM/s.Caparo Engineering India Ltd.                         ... Appellant\nT-1, T-2, SIPCOT Industrial Estate,\nSriperumbudur Taluk,\nKanchipuram District - 602 105\n                                           4\n\n\n\n     Versus\n\nThe Commissioner of Customs, Chennai-IV ... Respondent\nNo.60, Rajaji Salai,\nCustom House,\nChennai 600 001\n\n\n\nAPPEARANCE :\n\nDr. C. Manickam, Advocate\nMr. K.K. Sekar, Advocate\nFor the Appellants\n\nMr. M. Ponnusamy, Special Counsel\nMs. Anandalakshmi Ganeshram, Superintendent (A.R)\nFor the Respondent\n\nCORAM :\nHON'BLE MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL)\nHON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)\n\n\n\n                                   DATE OF HEARING : 14.07.2023\n                                   DATE OF DECISION : 02.11.2023\n\n              FINAL ORDER Nos.40980-40987/2023\n\n\n\nORDER :\n       These appeals arise out of a single impugned order. The issue\n\ninvolved in all these appeals being similar and connected they were\n\nheard together and are disposed of by this common order.\n\n\n\n2.     Brief facts are that M/s. Ashok Leyland Nissan Vehicles Ltd.\n\n(ALNVL) is a joint venture between M/s Ashok Leyland Ltd. (ALL) and\n\nM/s Nissan Motors Co Ltd (NMCL) with a share holding pattern, in the\n\nratio of 51% : 49% to manufacture Passenger Cars / Light\n\nCommercial Vehicles (LCV). M/s. ALNVL was incorporated as a Private\n\nLimited   Company       during     May,       2008.   It   does    not   have   any\n\nmanufacturing      facility   of   its    own,    and      was    getting   vehicles\n                                    5\n\n\n\nmanufactured by M/s. Renault Nissan Automotive India Pvt. Ltd,\n\nChennai (M/s RNAIPL) and M/s ALL, Hosur under a Contract\n\nManufacturing arrangement entered into with the said manufacturers.\n\nThe passenger cars like 'Evalia and 'Stile' were being manufactured at\n\nM/s RNAIPL and the LCVs like 'Dost, 'Partner' and 'Mitr' were being\n\nmanufactured at M/s ALL, Hosur. 'Evalia' models manufactured at\n\nM/s RNAIPL were being marketed by M/s. Nissan Motor India Private\n\nLimited (M/s.NMIPL) through their dealer network, while 'Stile' model\n\nmanufactured at M/s RNAIPL and the LCVs manufactured at M/s ALL\n\nwere being marketed by M/s ALL through their dealer network.\n\n3.    Based on intelligence, the Officers of DGCEI-CZU visited the\n\npremises of M/s ALNVL and other companies on various dates and\n\ncaused verification of records/documents. During the course of\n\nverification, it was revealed that M/s ALNVL had imported capital\n\ngoods under the EPCG Scheme at Zero duty / 3% concessional rate of\n\nduty and installation certificates had been obtained for installing the\n\nsaid capital goods at nine premises of supporting manufacturers of\n\nM/s ALNVL including M/s RNAIPL.\n\n4.    The documents and the customs data showed that M/s. ALNVL\n\nhad imported Capital goods at zero duty / 3% concessional rate of\n\ncustoms duty under the EPCG scheme under the cover of 65 EPCG\n\nLicences as under :\n\na) 14 EPCG Licences valued at around Rs. 75.45 Crore Involving a\nduty foregone amount of Rs. 18.65 Crore for the manufacture of\nLCVs, namely, 'Dost', 'Partner' and 'Mitr' at M/s. ALL; and\n\n\nb) 51 EPCG Licences valued at around Rs. 334 Crore involving a duty\nforegone amount of Rs. 89.07 Crore for the manufacture of 'Evalia'\nand    'Stile',   at     M/s    RNAIPL      and     their     supporting\nmanufacturers/vendors.\n                                           6\n5.         On verification of the 51 EPCG licenses issued to M/s ALNVL by\n\nDGFT, it revealed that:\n\n\n     I)       The Licences have been issued for Import of dies, Jigs and\n              checking fixtures etc for manufacture of "Passenger Motor\n              Vehicles (Chassis/fully built - goods/passenger)" falling\n              under ITC HS Code 87033110, 87033119 and also under\n              87033199 (In some of the licenses);\n     II)      M/s Renault Nissan Automotive India Pvt Ltd, Oragadam\n              (M/s RNAIPL) and M/s Nissan Motor India Private Limited,\n              Oragadam along with some other companies have been\n              endorsed as supporting manufacturer in respect of all the 51\n              licenses   (The   details   of   the   license-wise   supporting\n              manufacturers are as per Annexure-B to the SCN).\n     III)     M/s ALNVL had executed bank guarantees amounting to Rs.\n              14,35,55,000/- at the time of registration of the 51 EPCG\n              licences with Custom House, Chennai,\n\n\n6. The analysis of the import and export data, revealed that for the\n\nmanufacture and export of 'Evalia' and 'Stile' model vehicles, M/s\n\nALNVL had imported capital goods in the form of dies, jigs, checking\n\nfixtures etc., under EPCG Scheme vide 108 bills of entry (105 bills of\n\nentry through Chennai Seaport (INMAA1) and 3 bills of entry through\n\nChennai Air cargo (INMAA4)) totally valued at Rs 334.18 Crore during\n\nthe period 2011-13. The said capital goods were imported under 51\n\nEPCG licenses issued during the period 2011 to 2013. Further it is\n\nseen that M/s ALNVL had exported 286 'Evalia'/'Stille' vehicles under\n\nEPCG Scheme vide 23 shipping bills through M/s NMIPL and M/s. ALL,\n\nrespectively, totally valued at FOB Rs. 25.79 Crore through various\n\nshipments.\n\n\n7.    The investigation revealed a case of violation of the provisions of\n\nEPCG licenses on the main ground that M/s.ALNVL had failed to fulfil\n                                     7\n\n\n\nthe Export obligation.     The DGCEI-CZU had registered a case of\n\nviolation of the provisions of the Export Promotion Capital Goods\n\nScheme (EPCG Scheme, for short) in the import of capital goods for\n\nthe manufacture of 'Evalia' and Stile Model vehicles by M/s Ashok\n\nLeyland Nissan Vehicles Ltd. Subsequently, during February, 2016,\n\nthe case was transferred to the Directorate of Revenue Intelligence,\n\nChennai Zonal Unit (DRI-CZU) for carrying out further investigation.\n\nDocuments were verified and statements recorded. During the course\n\nof investigation, M/s ALNVL had voluntarily deposited a total amount\n\nof Rs 11.92 Crore by submitting demand drafts towards their Customs\n\nduty liability for non-fulfilment of Export obligation as detailed in\n\nparagraph 11.0 of the SCN.\n\n\n8.    The summary of the violations alleged by department are as\n\nunder:-\n\n     "(i)      M/s. ALNVL have failed to achieve the minimum of 50%\n     export obligation in respect of 23 EPCG authorisations, issued in\n     terms of customs notification no. 102/2009 dated 11/09/2009,\n     within the block period of 1st to 4th year. M/s ALNVI, is therefore,\n     liable to pay the proportionate duties of customs along with\n     applicable interest, within 3 months from the expiry of the block\n     of years to the extent of non-fulfilment of export obligation in\n     respect of the said 23 EPCG authorizations.\n\n\n     (ii) Besides, M/s. ALNVL had also indulged in diversion of capital\n     goods to unauthorized premises, imported under nine EPCG\n     authorizations, including the capital goods imported under six out\n     of the 23 EPCG authorizations, for which, the minimum 50%\n     export obligation has not been fulfilled. Therefore, the benefit of\n     Customs Notification no. 102/2009-Cus and 103/2009-Cus both\n     dated 11/09/2009 (as the case may be), is liable to be denied in\n     respect    of   the   goods   imported   under   the   nine   EPCG\n     authorizations.\n                                             8\n       (ii)      Apart from the above, some of the capital goods\n       imported under 5 of the 23 EPCG authorisations and installed at\n       the    premises        of    M/s   RNAIPL,    appeared     to    have     been\n       destroyed/consumed by wear and tear and hence were not\n       available in the installed premises. It has also come to light that\n       these capital goods were used in the manufacture of other\n       models of the supporting manufacturer M/s RNAIPL. The non-\n       availability    of     these    impugned     capital    goods    for    further\n       production of the goods intended for export contributed to the\n       default of prescribed Export obligation. Hence, the benefit of\n       Customs Notification No. 102/2009-Cus. dated 11/09/2009, is\n       liable to be denied in respect of the non-available capital goods\n       imported under 5 EPCG authorizations.\n\n\n9.      Thus Show Cause Notice dated 15.09.2016 was issued to the\n\nappellants     proposing       to     demand    differential   duty    denying    the\n\nexemption under Notification No. 102/2009 dated 11.09.2009 along\n\nwith interest, for imposing penalties, for confiscation of goods under\n\nSection 111 (d) & 111 (o) of Customs Act 1962 etc. The Show Cause\n\nNotices were issued in respect of 51 EPCG licenses. After due process\n\nof law the original authority found lapses in regard to 26 EPCG\n\nlicenses and passed the following :\n\n                                          ORDER\n\n" 1) In respect of M/s.Ashok Leyland Nissan Vehicles Ltd., Kochar Towers, # 19,\nVenkatanarayana Road, T. Nagar, Chenai - 600017 for imports in Sea Customs,\nChennai, I order as below :\n(i) I demand customs duty of ₹21,43,78,078/- (Rupees Twenty One Crore, Forty Three\nLakh, Seventy Eight Thousand and Seventy Eight only) as detailed against fourteen\nlicenses in Table-2 at para no.34.1 of this order from M/s Ashok Leyland Nissan/Ashok\nLeyland Limited under section 143(3) of the Customs Act, 1962 read with Notification\nno. 102/2009- Customs dated 11/09/2009 and the bonds furnished thereof, for non-\nfulfilment of export obligation;\n                                           9\n(ii) I demand Interest at the rate of 15% from Ashok Leyland Nissan as per Notification\nNo. 102/2009-Customs dated 11.09.2009 on the duty demanded at (1) above from the\ndate of import of the goods;\n\n\n(iii)   the exemption availed under notification no.102/2009-Customs dated\n11/09/2009 in respect of the capital goods imported as detailed against three licenses\nmentioned in Table-3 at para no.374 of this order. I demand customs duty of\n₹4,17,93,473/- (Rupees Four Crore, Seventeen Lakh, Ninety-Three Thousand, Four\nHundred and Seventy-Three, only) from Ashok Leyland Nissan/Ashok Leyland under\nsection 143(3) of the Customs Act, 1962 read with notification no. 103/2009- Customs\ndated 11/09/2009, and the bonds furnished thereof;\n\n\n(iv)    I demand Interest at the rate of 15% from Ashok Leyland Nissan/Ashok Leyland\nas per Notification No. 103/2009 both dated 11.09.2009 on the duty demanded at (iii)\nabove from the date of import of the goods;\n\n\n(v)     I deny the exemption availed under notification no. 102/2009-Customs dated\n11/09/2009 in respect of the capital goods imported as detailed against six licenses\nmentioned at Table-4 at para no.37.4 of this order. I demand customs duty of\n₹10,77,24,468/- (Rupees Ten Crore, Seventy Seven Lakh, Twenty Four Thousand, Four\nHundred and Sixty-Eight only) from Ashok Leyland Nissan/Ashok Leyland Limited\nunder section 143(3) of the Customs Act, 1962 read with notification no. 102/2009-\nCustoms dated 11/09/2009, and the bonds furnished thereof;\n\n\n(vi)    I demand Interest at the rate of 15% from M/s Ashok Leyland Nissan/Ashok\nLeyland Limited as per Notification No. 102/2009 both dated 11.09.2009 on the duty\ndemanded at (v) above from the date of Import of the goods:\n\n\n(vii)   I deny the exemption availed under notification no. 102/2009- Customs dated\n11/09/2009 in respect of the capital goods imported as detailed against three EPCG\nLicenses mentioned In Table-6 at para no. 39.1 of this order. I demand customs duty of\n₹ 71,47,851/- (Rupees Seventy One Lakh, Forty Seven Thousand, Eight Hundred and\nFifty One, only) from M/s Ashok Leyland Nissan/Ashok Leyland Limited under section\n143(3) of the Customs Act, 1962 read with notification no. 102/2009- Customs dated\n11/09/2009 and the bonds furnished thereof;\n                                                10\n(viii)        I demand Interest at the rate of 15% from M/s Ashok Leyland Nissan/Ashok\nLeyland Limited as per Notification No. 102/2009-Customs dated 11.09.2009 on the\nduty demanded at (vii) above from the date of Import of the goods.\n\n\n(ix)          I order confiscation of the seized capital goods valued at ₹187,98,13,669/-\n(Rupees One Hundred and Eighty-seven crore, Ninety Eight Lakh, Thirteen Thousand,\nSix Hundred and Sixty Nine, only) (A.V.) which were Imported by claiming benefit under\nnotification No. 102/2009. Customs dated 11/09/2009, under section 111(d) and\n111(0) of the Customs Act, 1962. However I give option for redemption of the said\ngoods U/s 125 of the Customs Act 1962, on payment of redemption fine of\n₹ 15,00,00,000/- (Rupees Fifteen Crores Only);\n\n\n(x)           I order confiscation of the goods other than the seized goods mentioned at (b)\nabove, valued at ₹32,28,71,910/- (Rupees Thirty-Two Crore, Twenty-Eight Lakh,\nSeventy-One Thousand, Nine Hundred and Ten, only) (A.V.), under section 111(d) and\n111(0) of the Customs Act, 1962. However, I give option for redemption of the said\ngoods U/s 125 of the Customs Act 1962, on payment of redemption fine of\n₹ 3,00,00,000/- (Rupees Three Crores Only);\n\n\n(xi)          I Impose a penalty of ₹ 5,00,00,000/-(Rupees Five Crores Only) on Ashok\nLeyland Nissan/Ashok Leyland Limited under section 112 (a) of the Customs Act, 1962;\n\n\n(xii)         I order appropriation of an amount of ₹11,92,05,288/- (Rupees Eleven Crore,\nNinety Two Lakh, Five Thousand, Two Hundred and Eighty Eight, only) voluntarily\ndeposited by them, towards the duty demanded above; and\n\n\n(xiii)        I order enforcement and adjustment of the bank guarantees executed by\nthem, with the Customs, at the time of registration of the EPCG licenses towards the\nduty and interest, demanded above."\n\n\n2)            I impose penalty on the following manufacturers / sub contractors under\nsection 112 (b) of the Customs Act, 1962.\n\n\n        (i)   I impose penalty of ₹10,00,000/-(Rupees Ten Lakhs Only) on M/s Renault\n        Nissan Automotive India Private Limited, Plot No. 1, SIPCOT Industrial Park,\n        Oragadam, Mattur (Post), Sriperumbudur Taluk, Kanchipuram District, Tamilnadu -\n        602105, for diverting/ non availability of imported capital goods under EPCG\n                                         11\n\n\n\nScheme in the capacity of Supporting Manufacturer for full life period of machines,\neven before fulfilling the Export Obligation;\n\n\n(ii) I impose penalty of ₹10,00,000/-(Rupees Ten Lakhs Only) on M/s Gestamp\nAutomotive Chennai Private Limited, Plot No. B12, SIPCOT Industrial Park, Phase IL\nVengadu Village, Pillaipakkam Post, Sriperumbudur Taluk, Kanchipuram District,\nTamil Nadu-602105, for having installed the diverted premises;\n\n\n(iii) I impose penalty of ₹10,00,000/-(Rupees Ten Lakhs Only] on M/s Myoung Shin\nIndia Automotive Pvt Ltd. No. 496/2, Mannur Village, Valarpuram, Sriperumbudur,\nKanchepuram, Tamil Nadu 602 105, for having diverted the Impugned capital\ngoods Imported under the EPCG Scheme, to an unauthorised premises;\n\n\n(iv) I Impose penalty of ₹10,00,000/-(Rupees Ten Lakhs Only) on M/s Daejoo\nAutomotive India Pvt Ltd. No. 134, Kllacherry Pachayettu, Govinda Medu Village,\nThiruvallur, for having installed the diverted impugned capital goods Imported\nunder the EPCG Scheme, in an unauthorised premises and subsequently diverting\nthem to another unauthorised premises;\n\n\n(v) I impose penalty of ₹10,00,000/-(Rupees Ten Lakhs Only) on M/s MS Global\nIndia Automotive Pvt Ltd, Survey No. 133 (Part), 134 (Part) & 135 (Part), SIPCOT\nIndustrial Estate, Oragadam Village, Singaperumal Koll Road, Mattur (PO),\nSriperumbudur Taluk, Kanchipuram District, Tamil Nadu-602105, for having\nInstalled the diverted impugned capital goods imported under the EPCG Scheme in\nan unauthorised premises;\n\n\n(vi) I impose penalty of ₹10,00,000/-(Rupees Ten Lakhs Only) on M/s Cosma\nInternational India Pvt Ltd, RNS-11, SIPCOT Industrial Growth Centre, Orgadam,\nVadakupattu, Sriperumbudur, Kanchepuram, Tamil Nadu 603204, for having\ndiverted the impugned capital goods Imported under the EPCG Scheme to an\nunauthorised premises; and\n\n\n\n\n(vii) I impose penalty of ₹10,00,000/-(Rupees Ten Lakhs Only) on M/s Caparo\nEngineering India Limited, T-1, T-2, SIPCOT Industrial Estate, Sunguvarchatram,\nSriperumbudur Taluk, Kanchipuram District, Tamilnadu 602106 for having installed\nthe diverted Impugned capital goods Imported under the EPCG Scheme In an\nunauthorised premises.\n                                              12\n3)        In respect of M/s Ashok Leyland Nissan Vehicles Ltd, Kochar Towers, # 19,\nVenkatanarayana Road, T. Nagar, Chennai-600017 for Imports in Air Customs, Chennai\nfollowing orders are passed:\n     (i) I demand customs duty of ₹38,59,980/- (Rupees Thirty Eight Lakh, Fifty\n     Nine Thousand, Nine Hundred and Eighty only) as detailed against three\n     licenses In Table-2 at para no. 34.1of this order from M/s Ashok Leyland\n     Nissan/Ashok Leyland Limited under section 143(3) of the Customs Act, 1962\n     read with Notification no. 102/2009- Customs dated 11/09/2009 and the\n     bonds furnished thereof, for non-fulfillment of export obligation;\n\n\n     (ii) I demand interest at the rate of 15% from M/s Ashok Leyland\n     Nissan/Ashok Leyland Limited as per Notification No. 102/2009 Customs dated\n     11.09.2009 on the duty demanded at (1) above from the date of Import of the\n     goods;\n\n\n     (iii) I deny the exemption availed under Notification no. 102/2009-Customs\n     dated 11/09/2009 In respect of the capital goods imported as detailed against\n     three Licenses in Table-6 at para no.39.1of this order. I demand customs duty\n     of ₹12,26,700/- (Rupees Twelve Lakh, Twenty-Six Thousand and Seven\n     Hundred, only) from M/s Ashok Leyland Nissan/Ashok Leyland Limited under\n     section 143(3) of the Customs Act, 1962 read with notification no. 102/2009-\n     Customs dated 11/09/2009 and the bonds furnished thereof,\n\n\n     (iv) I demand interest at the rate of 1596 from M/s Ashok Leyland Limited as\n     per Notification No. 102/2009-Customs dated 11.09.2009 on the duty\n     demanded at (ii) above from the date of import of the goods;\n\n\n     (v) I order confiscation of the seized goods valued at ₹3,11,59,224/- (Rupees\n     Three Crore, Eleven Lakh, Fifty-Nine Thousand, Two Hundred and Twenty-Four,\n     only) (A.V.) under section 111(d) and 111(0) of the Customs Act, 1962.\n     However I give option for redemption of the said goods U/s 125 of the\n     Customs Act 1962, on payment of redemption fine of ₹30,00,000/-(Rupees\n     Thirty Lakhs Only)\n\n\n     (vi) I order confiscation of the goods other than the seized goods mentioned\n     above, valued at ₹62,82,547/- (Rupees Sixty-Two Lakh, Eighty-Two Thousand,\n     Five Hundred and Forty-Seven, only) (A.V.), under section 111(d) and 111(0) of\n     the Customs Act, 1962. However I give option for redemption of the said goods\n                                                13\n\n\n\n       U/s 125 of the Customs Act 1962, on payment of redemption fine of\n       ₹6,00,000/-(Rupees Six Lakhs Only);\n\n\n       (vii) I impose penalty of ₹6,00,000/-(Rupees Six Lakhs Only) on M/s Ashok\n       Leyland Limited under section 112 (a) of the Customs Act, 1962; and\n\n\n       (viii) I order enforcement and adjustment of the bank guarantees executed by\n       them with Customs at the time of registration of the EPCG licenses, towards\n       the duty and interest, demanded above;\n\n\n(ix)       Nissan Automotive India Private Limited, Plot No. 1, SIPCOT Industrial\nPark, Oragadam, Mattur (Post), Sriperumbudur Taluk, Kanchipuram District,\nTamilnadu - 602105 penalty under section 112 (a) of the Customs Act, 1962, for\nutilising/non availability of the capital goods Imported under EPCG Scheme in the\ncapacity of Supporting Manufacturer for full life period of machines, even before\nfulfilling the Export Obligation.\n\n\n        Summary of Duties & Interest (as applicable) Fines & Penalties ordered:\n            Notice              Duty(₹)             Redemption Fine     Penalty(₹)\n                                                    (₹)\n              I.       Sea Port, Chennai\n            M/s Ashok Leyland    21,43,78,078/-     15,00,00,000/-      5,00,00,000/-\n                                  4,17,93,473/-      3,00,00,000/-\n                                 10,77,24,468/-\n                                    71,47,851/-\n            M/s Renault Nissan   NA                 NA                  10,00,000/-\n            M/s Gestamp          NA                 NA                  10,00,000/-\n            Automotive\n            Chennai\n            M/s Myoung Shin      NA                 NA                  10,00,000/-\n            India Automotive\n            M/s Daejoo           NA                 NA                  10,00,000/-\n            Automotive\n            M/s MS Global        NA                 NA                  10,00,000/-\n            India Automotive\n            M/s Cosma            NA                 NA                  10,00,000/-\n            International\n            M/s CAparo           NA                 NA                  10,00,000/-\n            Engineering India\n\n             II.      Air cargo, Chennai\n            M/s Ashok Leyland    38,59,980/-        30,00,000/-         6,00,000/-\n                                 12,26,700/-         6,00,000/-\n            III.\n            M/s Renault Nissan   NA                 NA                  20,00,000/-\n                                            14\n\n\n\nFor the Appellant:\n\n\n10.     Learned       counsel        Dr.    C.    M anickam   appeared         and\n\nargued for appellant.                  It is subm itted that M/s Ashok\n\nLeyland Ltd, headquartered at Chennai, are the second\n\nlargest manufacturer of Automobile Commercial vehicles in India and\n\nexports to overseas countries besides catering to the needs of the\n\nDefence Sector of the Government of India and Various State\n\nTransport Corporations across the country. A Joint Venture between\n\nAshok Leyland and Nissan Motor, Japan was formed in the year 2008 with\n\na shareholding pattern in the ratio of 51% : 49%. The new legal Joint\n\nVenture entity was incorporated as a Private Limited Company in the name\n\nand style of "Ashok Leyland Nissan Vehicles Limited " to manufacture light\n\ncommercial and passenger vehicles besides other automobiles to cater to\n\ndomestic and international markets. The said Joint Venture company (the\n\nappellants herein), subsequently did not have any manufacturing facility in\n\nIndia and hence entered into a Contract Manufacturing Arrangement /\n\nAgreement with Renault Nissan Automotive Ltd., Oragadam, Sriperumbudur,\n\nTamil Nadu for manufacture of passenger vehicles in the name of 'Stile',\n\n'Evalia' etc. and with Ashok Leyland Limited for manufacture of commercial\n\nvehicles at their Hosur Plant in the name of 'Dost', 'Partner', 'Mitra' etc.\n\n\nAvailing of EPCG Benefits from Ministry of Commerce:\n\n\n11.     It is submitted by the learned counsel that the JV company viz\n\nAshok Leyland Nissan Vehicles Limited, had plans to export their\n\nmanufactured products in view of the huge overseas market potential that\n\nexisted for such vehicles at that point of time. As the high end technical\n\nspecifications of the product would require capital goods which were not\n\navailable indigenously they had to import. The Company decided to avail\n\nthe benefits under EPCG Scheme in terms of the Foreign Trade Policy of\n                                               15\n\n\n\nthe GOI. Accordingly, the company obtained 51 EPCG Authorizations\n\nduring the period from September 2011 to August 2013 from the Office of\n\nthe Joint Director General of Foreign Trade, Chennai. As manufacturing\n\nhas to happen in the factory locations of Renault Nissan and Ashok Leyland,\n\ntheir names were mentioned as supporting manufacturers in the respective\n\nlicenses.\n\n\nInitial Compliance of the conditions of EPCG licenses :\n\n\n12.     The imported goods covered under all the licenses and that of\n\nsupporting manufacturers were installed accordingly. Commercial\n\nproduction commenced and sales/ supplies started including export of\n\ngoods. Installation certificates were obtained from the prescribed\n\nauthorities and submitted to the JDGFT, Chennai. The demand for\n\npassengers vehicles were bit low. The licensing conditions required\n\nsubmission of installation certificates within 6 months from the date of\n\nimport and the export obligation had to be fulfilled equivalent to 50% in\n\nvalue during first block of 4 years /6 years and the balance 50% in the\n\nsecond block of 6years/ 8 years as the case may be. While the appellants\n\nwere able to fulfil the 50% obligation in time for the Commercial vehicles\n\nthey could not meet the deadline in respect of passenger vehicles,\n\nthough there had been exports of few quantity of passenger vehicles as\n\nwell. Further, in few cases, the supporting manufacturers, instead of\n\ninstalling the goods in the premises endorsed in the authorizations, had\n\ninstalled in a different location; which was their own different unit or their\n\nsister concern. The supporting manufacturers did not keep the appellants\n\ninformed about such installation in a different location as they did not\n\nknow about the compliance requirements. However they had been issued\n\nthe installation certificates indicating the installation as required. This fact of\n\ninstallation of imported duty free capital goods in a different location or non\n                                              16\n\n\n\nfulfilment of 50% of the export obligation in the first block period was not\n\nintimated to the JDGFT authorities. In fact, the so called unauthorized\n\npremises as alleged in SCN where the capital goods were installed is the\n\npremises of the group companies itself.\n\n\nInvestigation by DGCEI and DRI Authorities\n\n13.     The DGCEI authorities in the month of September 2015, visited the\n\npremises of the JV company (ALNVL- Ashok Leyland Nissan Vehicles\n\nLtd) and also the premises of all the supporting manufacturers whose\n\nnames were endorsed in the EPCG authorizations and verified the\n\ncompliance aspects. The DGCEI entertained a doubt that the appellants\n\nhave not complied with the conditions imposed under the EPCG scheme at\n\nall. Subsequently the case was transferred to DRI, Chennai Unit as only\n\nCustoms have the jurisdiction to verify or investigate import related\n\nmatters.\n\n\n13.1    On a thorough review of all the 51 EPCG authorizations, they\n\ncould not find any deviation including procedural ones in respect of 25\n\nEPCG authorizations which pertain to capital goods imported and\n\ninstalled in the premises of Ashok Leyland. However they could\n\nidentify procedural lapses in the case of 26 EPCG authorizations\n\npertaining to goods imported and installed in the premises of Renault\n\nNissan and their supporting manufacturers.\n\n\n\n13.2    It was clarified to the co-noticees by the appellants that the\n\nallegations are only procedural in nature and the FTP issued by GOI\n\nallows condonation in all such cases and appellants have enough time\n\nto     approach     authorities      seeking      their   permission   for   such\n\ncondonation. Appellants also then paid an amount of Rs 11.92 crores\n\nduring the investigation reserving their right to appeal in case of\n                                           17\n\n\n\ndemands raised against them at a later point of time. In the mean\n\ntime Customs also seized certain goods but was released after seeing\n\nmerits in the plea of the appellant.\n\n\nShow Cause Notice :\n\n14.     The Ld. Counsel submitted that in spite of the submissions made\n\nand explanations offered by them, the DRI (Chennai Zone Unit) proceeded\n\nto issue a Show Cause Notice dated 15.09.2016 in respect of 26 EPCG\n\nAuthorizations alleging (i) non-fulfillment of export obligation (ii) Diversion of\n\nCapital goods and (iii) non- availability of capital goods. Accordingly, the\n\nduty demands were raised in the notice as detailed below :\n\n\nSI no   Break -up of demand                               Amount involved (in Rs)\n\n(i)     Proportionate duty towards non-fulfilment of EO     21,82,38,058\n(ii)    Duty in respect of Diverted goods                   10,77,24,468\n(iii)   Duty in respect of diverted goods including\n        non-fulfilment of EO                                  4,17,93,473\n(iv)    Duty in respect of the unavailable goods                83,74,551\n                                                          ----------------------\n                      Total Demand                            37,61,30,550\n\n                                                          --------------------------\n\n\n\nBesides the above duty demand, the notice also sought to impose interest\n\nand penalties besides proposal for confiscation of the seized goods\n\nand invocation of Bank guarantees executed with customs at the time of\n\nimport. The notices were sent to seven supporting manufacturers\n\nproposing penalties on them for non-compliance at their end.\n\n\nMerger of the JV Company with Ashok Leyland\n\n15.     The Ld. Counsel submitted that, a commercial dispute arose between\n\nthe JV Partners - viz. Ashok Leyland and Nissan Motor which resulted in\n\ndissolution of the JV and acquisition of the rights and liabilities by Ashok\n\nLeyland with the existing Nissan through its entity - Ashok Leyland Vehicles\n\nLimited (which became            a   subsidiary     of    Ashok          Leyland).     This\n                                        18\n\n\n\ndevelopment happened on 16.12.2016. Subsequently, the management\n\nof Ashok Leyland decided to merge its subsidiary Ashok Leyland Vehicles\n\nLimited with Ashok Leyland and this happened through NCLT proceedings\n\non 17.12.2018. The above developments were in public domain and informed\n\nto ROC authorities and all the stake holders including the DGFT and\n\nCustoms. Consequent to such dissolution of JV and new merge, the IE\n\nCode, Income Tax PAN and all other statutory documents had to be\n\namended to include ALVL in AL's name. It was informed to all the stake\n\nholders that Ashok Leyland will be responsible for all the rights and liabilities\n\nof the erstwhile JV company ( ALNVL) which later became a subsidiary\n\n(ALVL) before getting merged with the parent company Ashok Leyland (AL).\n\n\n16. After such statutory compliances as required consequent to the\n\nmerger the appellant approached the EPCG Committee/ Policy\n\nRelaxation Committee, New Delhi for Condonation of procedural lapses\n\nand extension of Export Obligation fulfilment period.\n\n\n16.1   The Foreign Trade Policy provides for granting of extension of\n\nexport obligation period wherever obligation could not be fulfilled on\n\ntime due to valid reasons and also provides for condoning procedural\n\nlapses. The appellants vide letters dated 13.03.2018, 07.5.2018,\n\n19.05.2018, 28.05.2018, 21.6.2018, 25.06.2018, 19.11.2018, and\n\n14.12.2018 requested EPCG Committee for relaxations and also\n\nrequested the adjudicating authority to keep the adjudication pending\n\ntill the decision of the DGFT committee. The adjudicating authority\n\nhad given extension of the hearing of the case several times.\n\n\n\nDecisions of the EPCG / PRC Committees - DGFT, New Delhi\n\n16.2   The EPCG Committee vide its              decision dated 13.02.2019\n\napproved the request and granted extension of export obligation\n                                      19\n\n\n\nperiod in respect of 14 (out of the 26) licenses for two years. This\n\norder of extension was subject to payment of compensation fees as\n\nprescribed under the FTP and to be regularized by the Review\n\nAuthority (RA) (JDGFT Chennai). The committee also had gone on\n\nrecord to say that there had been no other issue in respect of these\n\n14 cases except for extension of EO. However, the Committee directed\n\nthe RA to verify about submission of installation certificates and also\n\nthat the matter has not been adjudicated by the adjudicating\n\nauthority.\n\n\n16.3 In respect of the remaining 12 licenses, the appellant\n\napproached the Policy Relaxation Committee (PRC) which again\n\nconsidered the merits of the case and vide their decision dated\n\n02.04.2019, condoned all the procedural irregularities like diversion\n\nand installation of capital goods in a location other the one\n\nendorsed in the authorization and granted extension of export\n\nobligation period unconditionally.\n\n\n16.4 The Ld. Counsel argued that DGFT, Delhi which is the\n\nCompetent Authority in respect of FTP, had seen merits in the\n\nrequest   made   by   appellant   and     granted   extension   of   export\n\nobligation in respect of all the 26 licenses and condoned the\n\nprocedural lapses in respect of 12 out of the 26 licenses as well.\n\nWhile there had been no directions by the RA for granting the relief\n\nin respect of 12 licenses, the conditions imposed in respect of 14\n\nlicenses are all generic in nature.\n\n\nCompliance in terms of the decisions of the EPCG/PRC Committees by the\nappellants\n\n\n17. The appellants then complied with the conditions imposed by the\n\nEPCG Committee in respect of the 14 authorizations by paying the\n                                        20\n\n\n\ncomposition    fee    on   various     dates   between   22.05.2019    and\n\n20.06.2019 and submitted the documents evidencing such payments to\n\nJDGFT, Chennai (RA) on 26.06.2019.\n\n\n17.1 The appellants also complied with the provisions of the\n\nFTP in paying the composition fee for the 12 authorizations and\n\nsubmitted their claims for discharge of EO on               19.01.2021     /\n\n20.01.2021.\n\n\nOrders passed by the Adjudicating Authority:\n\n\n17.2 It is submitted that immediately after the merger of ALNVL/\n\nALVL to AL they had approached the                EPCG   Committee      for\n\nextension of export obligation period and also for condonation\n\nof procedural lapses. This was done as they were confident of exporting\n\nthe qualified product since the parent entity (AL) is a pioneer in\n\nautomobile industry. In fact, in this process, AL was put into a position to\n\nfulfil the specific export obligations fixed against the licenses granted to\n\nALNVL besides maintaining their annual average and obligations\n\nagainst their other licenses.\n\n\n17.3 It normally takes time at DGFT to consolidate various cases of\n\ndifferent exporters, collating the same and to place before the\n\ncommittee meetings for discussions and decisions. On account of this,\n\nthe appellants were seeking adjournment with the adjudicating authority\n\nso as to wait till final outcome from DGFT, New Delhi.\n\n\n17.4 The appellants submitted around 18 letters to the adjudicating\n\nauthority seeking time and informing the progress of the matter\n\npending before DGFT, New Delhi. The Adjudicating authority had\n\nbeen kind enough to grant time several times considering the merits\n\ninvolved in the case.\n                                   21\n\n\n\n17.5 The appellants on 25.03.2019 had submitted before the\n\nadjudicating authority that they had obtained order of extension and was\n\nin the process of complying with the EPCG Committee's decision once\n\nthe minutes are cleared and received. Once the PRC committee's\n\ndecision was released, the same was informed to the adjudicating\n\nauthority.\n\n\n17.6 While the appellant was awaiting a final chance to submit\n\ndocuments evidencing compliance of the Committee's decision, to their\n\nsurprise the adjudicating authority passed the impugned order dated\n\n21.06.2019. In fact, the appellants had paid the composition fee and\n\nother fees as per directions of the EPCG Committee for the 14\n\nauthorisations on 22.05.2019, 28.05.2019 and 20.06.2019 which is well\n\nbefore the date of passing the impugned order by the adjudicating\n\nauthority. They were awaiting a date for personal hearing before the\n\nadjudicating authority to submit the details of order passed by DGFT\n\nCommittee and the compliances on their end.\n\n\n\n17.7 It is submitted that if only the adjudicating authority had granted\n\na personal hearing they would have made a detailed submission about the\n\ndecision of Committee meetings and subsequent compliance etc. made\n\nby the appellant. In fact DGFT authorities were kind enough to adhere\n\nto their decision and advised the appellants to go ahead and complete\n\nthe EO which the appellants did complete.\n\n\n18.   It is argued by the Ld. Counsel that the Adjudicating Authority\n\nhad passed the order in haste without considering the facts and the\n\napprovals granted by the Competent Authority (i.e DGFT) in this matter.\n\nThe Adjudicating Authority was very well aware of the decisions of the\n\nEPCG Committee and PRC Committee in allowing extension of time for\n                                     22\n\n\n\nfulfilling export obligation for two years and condoning all the\n\nprocedural lapses vis installation of capital goods in places other than\n\nthe ones endorsed in the authorizations.\n\n\n18.1   In spite of being aware of these facts, the Adjudicating Authority\n\nhad proceeded to confirm the entire demands and penalties (not only\n\non the appellants but also on their supporting manufacturers) on the\n\nground that the appellants had not produced evidence complying with\n\nthe conditions of the FTP for getting such extensions which in fact the\n\nappellants had complied well before passing the adjudication order.\n\n\n18.2   The Ld. Counsel submitted that though there was some delay in\n\ncompliance of the condition of payment of composite fee, there is\n\nliterally no delay as the DGFT had not prescribed any time limit for such\n\ncompliance. The non-availability of the DGFT server had been one of\n\nthe reasons for the delay besides some hiccups in Banks server too.\n\nHowever, after the order of DGFT on 13.02.2019, the appellant complied\n\nthe condition before 20.06.2019 itself.\n\n\n18.3   The Ld. Counsel further submitted that issue of notice and\n\neffective hearing are integral part of quasi-judicial proceedings. There\n\nwas no effective hearing of the appellants before passing the order. Though\n\nthe previous adjudicating authority had adjourned the hearings for\n\napproaching the DGFT, the authority who passed the impugned order,\n\nsimply chose to ignore the decisions of the competent authority\n\n(DGFT) and proceeded to pass the exparte order without hearing the\n\nappellants. The impugned order is in violation of the principles of natural\n\njustice.\n\n\n18.4 The Ld. Counsel submitted that the Adjudicating Authority should\n\nhave acted in an objective manner to protect the legitimate rights of the\n                                       23\n\n\n\nindustry which would ensure substantial growth in business and particularly\n\nin export matters. The order of the adjudicating authority goes against the\n\nprinciples of ease of doing business and also the against maxim "Taxes\n\nand Duties are not to be exported".\n\n\n18.5   Without prejudice to the above, it is argued that the adjudicating\n\nauthority had proceeded to confirm the proposal in SCN to confiscate the\n\ngoods which is patently illegal and unsustainable. The very fact that the\n\ncompetent authority had allowed extension of time for fulfilment of\n\nExport Obligation period, and condoned the procedural lapses and\n\nthat exports had happened based on such approvals of the competent\n\nauthority, there can be no demand of duties alleging non fulfilment of EO\n\nand consequently no demand of duty or interest. For the same reasons\n\nthere cannot be an order for confiscation, imposition of fine and\n\npenalties as well. The order passed by adjudicating authority is illegal\n\nand needs to be set aside in toto.\n\n\n18.6 Further, the demand raised in SCN and the amounts confirmed\n\nin the impugned order for the 14 EPCG authorizations pertain to 50% of\n\nthe EO only since the allegation was only with reference to non fulfilment\n\nof EO pertaining to first block. During the visit of the DGCEI and DRI ,\n\nappellants had enough time to fulfil the balance 50% in terms of the FTP\n\nand the Customs notifications as well. The SCN refers to only 50% of\n\nnon-fulfilment of EO. The appellants state when substantive provisions\n\nof the law have been complied with (Exports have happened and\n\nprecious foreign exchange has been realised), it is incorrect on the part\n\nof the adjudicating authority to deny the benefit earned by appellants\n\nalleging procedural non-compliance; which in fact has been complied. The\n\nreason for passing the impugned order is that appellants failed to inform\n\nabout the compliance. In fact, appellants had informed about the order\n                                       24\n\n\n\ndt.13.02.2019 passed by DGFT extending the time and were taking steps for\n\ncompliance of payment of composite fee. Meanwhile the adjudicating\n\nauthority has passed the order in a haste.\n\n\n19.    The Foreign Trade Policy of the GOI and the Hand book of\n\nprocedures therein (Paragraph 5) provide for extension of time for fulfilment\n\nof export obligation, generally ,by default , on application by the exporters by\n\npaying a composition fee at a prescribed percentage of the unfulfilled export\n\nobligation value in respect of export promotion schemes like EPCG. This\n\ntime limit is generally two years from the date of expiry of the period of\n\nobligation. These powers are now being delegated to the Regional\n\nLicensing Authorities (RA). In cases of genuine difficulties faced by the\n\nexporters / importers - the FTP by its delegated powers (Para 2 of the FT\n\nP) -appoint Competent Authority ( Para 9 of the FTP ) viz DGFT, New Delhi\n\nto consider the grievances of the exporters and importers . This Competent\n\nAuthority is expected to apply its mind, verify the facts and take a decision on\n\nthe grievance representation of the Exporters / Importers. Such decisions\n\nare deemed to have been taken in public interest.\n\n\n19.1   The Appellants also submit that it is settled law that as far as FTP is\n\nconcerned, whenever a question of interpretation of policy or procedural\n\ncompliance, the decision of the DGFT is final and binding on all\n\nAuthorities concerning implementation (Para 2.3 of FTP) of the licence. In\n\nview of the above position of law, the DGFT having granted extension of\n\nEO period to all the licenses concerned and also condoned the procedural\n\ninfractions, denying the benefit alleging that appellant did not report\n\ncompliance of conditions imposed by DGFT is too flimsy especially in the\n\ncircumstances where export obligation have been completed in full within\n\nthe time granted by the EPCG and PRC Committees.\n                                              25\n\n\n\n\nPresent Status: Totally 26 EPCG Authorizations are involved.\n\n20.     The Appellants submit that out of the 26, in respect of 12 cases,\n\nPRC Committee had allowed extension of EO period for two years and had\n\ncondoned all procedural issues like installation of goods imported in a\n\ndifferent places other than the place which is endorsed in the\n\nauthorizations.      Exports     have     been     completed   (100%).   Necessary\n\ncomposition fees were paid, applications for grant of EODC's were\n\nsubmitted, and JDGFT, Chennai had granted the EODCs. [Export\n\nObligation Discharge Certificate]\n\n\n20.1    In respect of the balance 14 cases, the EPCG Committee allowed\n\nextension of EO period for two years. However, the EPCG Committee had\n\nput a condition that the customs department should not have adjudicated\n\nthe case. As per the advice by the JDGFT, Chennai who are bound by the\n\ndecision of the DGFT the appellants completed the exports, paid the\n\ncomposition fees.         They then submitted applications with the JDGFT,\n\nChennai for issuance of EODC which is under process.\n\n\n\n\n21.     The DGFT being the Competent Authority having granted\n\nextension of time to fulfil the Export obligation and also condoned\n\nthe procedural lapses in toto, and the appellants having fulfilled the\n\nExport obligation in full in respect of all the 26 cases of\n\nAuthorizations and obtained EODC in respect of 12 out of the 26, it\n\nis prayed that by the Ld. Counsel that impugned Order-in-Original No.\n\n69637/2019 dt 21.06.2019 may be set aside.\n\n\n22.     In addition, the Ld. Counsel for appellants submitted that the\n\nSCN is issued by DRI. However, they do not intend to contest the\n\nissue whether the SCN issued by DRI is proper and valid. The\n                                    26\n\n\n\nappellant has filed affidavit to the effect that they give up the\n\ncontest on this issue in this appeal before the Tribunal and that they\n\nwould not be contesting the issue before any other forum in regard\n\nto this appeal.\n\n\n23.   On   behalf   of   the   Department,    learned   Special   Counsel\n\nSri S. Ponnusamy appeared and argued the matter. The learned\n\nSpecial Counsel adverted to para-7 of the Notification No.102/2003-\n\nCus. dt. 11.09.2009 and submitted that the importers are required to\n\nexecute the bond binding themselves with all the conditions of the\n\nnotification as well as for fulfilling export obligation worth FOB value\n\n@ six times of the duty foregone amount on the imported goods. In\n\nthe present case, out of the total export obligation, 50% should be\n\nfulfilled within the first block period i.e. for 1st to 4th year from the\n\ndate of issuance of the EPCG authorisation. Again, as per para-8 of\n\nthe notification, the importer is required to submit proof of export\n\nobligation fulfilled within 30 days from the expiry of each block period\n\nfrom the date of authorization or within such extended time as the\n\nAsst. Commissioner / Deputy Commissioner may allow. If the export\n\nobligation is not fulfilled for any block, the importer shall within three\n\nmonths from the date of expiry of the said block period pay duties of\n\ncustoms equal to the amount of duty foregone.\n\n\n24.   The Hand Book of Procedure (HBP) 2009-14 was referred to by\n\nthe learned special counsel to submit that as per the para 5.8 of this\n\nHBP, the authorization holders shall fulfil the export obligation over\n\nthe specified period as per provisions mentioned therein. Para 5.8.3\n\nstates that when the export obligation is not fulfilled within the\n\nspecified period or extended period, the authorization holders shall\n\npay the duties of customs within three months from expiry of block\n                                   27\n\n\n\nyears. As per para 5.11 only one extension of two year can be\n\ngranted to first block year period in the case of Zero Duty EPCG\n\nscheme. Para 5.7 states that in case of failure to fulfil export\n\nobligation or any other condition of authorization, the authorization\n\nholder shall be liable for action under FT (D&R) Act, 1992, Orders,\n\nRules made thereunder, provisions of FTP and Customs Act, 1962.\n\n\n\n25.   In the present case, authorizations were issued from 2011 to\n\nApril 2012. The 1st block year ended during the April 2016. The\n\nimporter neither submitted proof of fulfilment of export obligation\n\nagainst 26 EPCG licenses for the first block period within 30 days nor\n\npaid customs duty after expiry of 3 months from the date of expiry of\n\nblock year. The importer during October 2016 to January 2019 vide\n\nseveral letters addressed to Commissioner had several times only\n\nsought extension of time to reply to the notice and for postponement\n\nof personal hearing on the ground that they were seeking extension\n\nto fulfil export obligation. From December 2016 onwards they have\n\nbeen representing the DGFT authorities to consider their request for\n\nextension of two years for the first block period which ended during\n\nApril 2016 and the request was rejected by the EPCG Committee on\n\n20.02.2018, for the reason by which that the matter was under\n\nadjudication by Customs.\n\n\n26.   In spite of making repeated representations for review of the\n\norder of rejection of the request for extension, however, on\n\n13.02.2019 the DGFT authority had granted extension of 2 years in\n\nrespect of 14 license subject to certain conditions.      One of the\n\nconditions was that the adjudication proceedings should not have\n\nbeen completed by the Customs.         Ld. Special counsel argued that\n                                    28\n\n\n\neven after getting approval for extension in respect of 14 licenses on\n\n13.02.2019 and for another 12 licenses on 02.04.2019, the importer /\n\nappellant did not furnish any evidence to prove fulfilment of export\n\nobligation. In other words, even after exhausting 7 years from the\n\ndate of licenses for the first block period they have not fulfilled export\n\nobligation.   In letter dt. 25.03.2019 while informing the decision of\n\nDGFT authority they have only requested the adjudicating authority\n\nmore time for complying with the conditions imposed by EPCG\n\nCommittee for granting extension of time and have not furnished any\n\ninformation regarding the fulfilment of export obligation.\n\n\n\n27.   The adjudicating authority has passed the impugned order on\n\n21.06.2019 on the ground that the condition for fulfilment of export\n\nobligation has ended in March / April 2016 itself. Assuming but not\n\nadmitting that the extension granted for two years is valid and can be\n\ntaken into account by customs, the appellants should have submitted\n\nthe proof of export obligation in regard to 26 licenses within 30 days\n\nfrom March / April 2018. The appellant has no evidence in this regard.\n\nThe Appellants therefore are bound to pay the duty within 3 months\n\nfrom the relevant date i.e before end of July 2018. The duty foregone\n\nhas not been paid by them.\n\n\n28.   There is no error committed by the adjudicating authority in\n\npassing the impugned order.\n\n\n29.   The contention of the appellant that the original authority\n\nshould have granted them more time to submit the compliance of\n\nDGFT orders was countered by the Special Counsel by putting forward\n\nthe argument that more than one year had lapsed from the relevant\n\ndate of July 2018. There is no merit in submitting that the original\n                                    29\n\n\n\nauthority ought to have waited for complying with the conditions of\n\nthe orders of DGFT in regard to extension of the license.          It is\n\nasserted by the learned special counsel that on the date of passing of\n\nthe Order-in-Original, the appellant had violated the substantial\n\ncondition of the notification and therefore the demand, interest and\n\npenalties confirmed in the order along with order of confiscation is\n\nvalid and sustainable.\n\n30.   When exemption of duty is granted subject to the condition, it\n\nis not sufficient that there is substantial compliance. The export\n\nobligation should have been fulfilled within the time limit. As per para\n\n5.11 of the HBP (EXIM Policy 2009-14) no further extension was\n\npossible for the first block year as one extension of 2 years can be\n\ngiven by the DGFT in case of Zero Duty EPCG scheme. The argument\n\nof learned counsel for    the appellant that the adjudicating authority\n\ndid not wait for implementation of the (extension) orders granted by\n\nthe DGFT is without any basis.\n\n31.   The decision in the case of CCE Vs Harichand Shri Gopal - 2010\n\n(11) TMI 13 (SC) was relied by the learned counsel to argue that\n\nwhen there is no compliance of the substantial condition, the delay\n\ncannot be condoned. In the case of Mangalore Chemicals Vs Deputy\n\nCommissioner - 1991 (55) ELT 437 (SC) the Hon'ble Supreme Court\n\nhad held that distinction has to be made between procedural condition\n\nof a technical nature and the substantive condition. Non-observance\n\nof the former is condonable while that of the latter is not condonable\n\nas likely to facilitate commission of fraud and introduce administrative\n\ninconvenience. Learned special counsel prayed that the appeals may\n\nbe dismissed.\n\n32.   Heard both sides.\n                                    30\n33.     The issues that arises for consideration are --\n\n\n(i) whether the demand of duty alleging violation of conditions of\n\nnotification 102/2009-Cus. dt. 11.09.2009 and notification 103/2009-\n\nCus. dt. 11.092009 are sustainable or not.\n\n\n(ii)    whether the demand of interest is sustainable or not.\n\n\n(iii) whether the denial of exemption availed under notification\n\n102/2009-Cus. dt. 11.09.2009 in respect of capital goods imported as\n\nper EPCG licenses is sustainable or not.\n\n\n(iv)    whether the order for confiscation of the goods and imposition\n\nof Redemption fine is legal and proper.\n\n\n(v)     whether the penalties imposed are sustainable or not.\n\n\n\n33.1 On the basis of the SCN, the three issues framed by the\n\nadjudicating authority as seen in para 32.1 of the impugned order is\n\nas below :\n\n(i)     Non-fulfilment of 50% EO in first block period for 23 EPCG\n\nlicenses.\n\n(ii)    Diversion of capital goods to premises other than those\n\nindicated in the EPCG licenses in the case of a EPCG licenses and\n\n(iii)   Non-availability of certain capital goods imported against 5\n\nEPCG licenses.\n\n\n33.2 The details of the license and the issues above are given in the\n\nTable I of para 32.3 of the order which is as below :\n                                             31\n        Table : 1\n\n\nS.No.   EPCG Authorisation   Import          EO        Not   Goods       Goods Not\n        No.                  Notification    fulfilled       Diversion   Available\n1.      0430010336           102/2009                                        ✓\n2.      0430010337           102/2009                                        ✓\n3.      0430010440           102/2009            ✓                           ✓\n4.      0430010441           102/2009            ✓                           ✓\n5.      0430010442           102/2009            ✓                           ✓\n6.      0430010495           102/2009            ✓\n7.      0430010607           102/2009            ✓\n8.      0430010683           102/2009            ✓\n9.      0430010755           102/2009            ✓\n10.     0430010806           102/2009            ✓\n11.     0430010837           102/2009            ✓\n12.     0430010851           102/2009            ✓\n13.     0430010916           102/2009            ✓\n14.     0430010917           102/2009            ✓\n15.     0430010918           102/2009            ✓               ✓\n16.     0430010919           102/2009            ✓\n17.     0430010928           102/2009            ✓\n18.     0430010929           102/2009            ✓\n19.     0430010931           102/2009            ✓               ✓\n20.     0430010932           102/2009            ✓\n21.     0430010939           102/2009            ✓               ✓\n22.     0430010946           102/2009            ✓               ✓\n23.     0430010988           102/2009            ✓               ✓\n24.     0430010989           102/2009            ✓               ✓\n25.     0430010990           102/2009            ✓\n26.     0430011130           103/2009                            ✓\n27.     0430011131           103/2009                            ✓\n28.     0430011132           103/2009                            ✓\n\n\n\n33.3 The Ld. Counsel for appellant has explained that due to\n\ndemerger of JV, its' further merger and due to bad market conditions\n\nthere was some difficulty in fulfilling the export obligation within the\n\ntime period. The FTP provides for condonation of such lapses and\n\nextension of time for fulfilment of EO. However, due to dissolution of\n\nearlier JV and constitution (merger) of the new entity the appellants\n\nhad to get the statutory documents amended before ROC, Income\n\nTax Pan, Customs IEC, DGFT etc. amended accordingly to make an\n\napplication seeking extension of time.\n\n\n\n33.4 From the records, we find that the EPCG Committee vide its\n\ndecision dated 13.02.2019 had approved the request of appellants\n                                     32\n\n\n\nand granted extension of time for fulfilment of obligation for a period\n\nof two years in respect of 14 EPCG licenses subject to certain\n\nconditions. For the remaining 12 EPCG licenses, the Policy Relaxation\n\nCommittee vide its' decision dated 02.04.2019 has condoned all the\n\nprocedural irregularities like diversions and installation of capital\n\ngoods in other locations, unconditionally. It is submitted by the Ld.\n\nCounsel that appellant has fulfilled the Export Obligations of all EPCG\n\nlicenses and they are awaiting the issuance of EODC from the DGFT,\n\nwhich is kept pending because of this litigation.\n\n33.5 The adjudicating authority has in fact taken note of the decision\n\npassed by the EPCG Committee on 13.02.2019 (for 14 licenses) and\n\nthe decision passed by Policy Relaxation Committee on 02.04.2019\n\n(for 12 licenses). However, she has proceeded to pass the order on\n\n21.06.2019 without giving the appellants a reasonable time to report\n\nthe compliance of the conditions.\n\n33.6 As per the order passed by EPCG Committee on 13.02.2009,\n\nthe period for fulfilment of EO is extended by two years on fulfilment\n\nof two conditions: Firstly, on payment of composition fee of 2% on\n\nthe duty saved amount. Secondly, the adjudication is not completed.\n\n33.7 On 25.03.2019, the appellants had submitted a letter before\n\nthe adjudicating authority informing the order passed by EPCG\n\nCommittee on 13.02.2019 and requesting for time as they had to get\n\ncopy of the minutes for complying with the conditions. The appellants\n\nmade the compliance in respect of 14 licenses by paying the\n\ncomposition   fee   on   various    dates   between   22.05.2019   and\n\n20.06.2019 and submitted the documents of compliance before\n\nJDGFT, Chennai, (RA) on 26.06.2019.\n\n33.8 The adjudicating authority was well aware of all these facts.\n\nThe appellants had issued letters dt. 13.03.2018, 07.05.2018,\n                                         33\n\n\n\n19.05.2018, 28.05.2018, 2.106.2018, 25.06.2018, 19.11.2018 and\n\n14.12.2018 to the DGFT Committees requesting to consider the\n\nextension of period. They also made request to inform the Customs\n\nauthorities so as to keep the adjudication pending. The relevant part\n\nof letter dt. 21.06.2018 reads as under :\n\n\n     "Respected Sir,\n\n     This has reference to our representations on the subject and our latest\n     letter requesting for a personal hearing to consider our case for\n     extension of export obligation period and regularization of other alleged\n     procedural irregularities.\n\n     We have informed the Commissioner of Customs. (Chennai IV) who is\n     adjudicating the issue that our request is under consideration by DGFT,\n     New Delhi and had sought time.\n\n     Customs authorities required a confirmation from the Office of the\n     DGFT, to the effect that the issue is under consideration.\n\n     We will be much obliged if our request is considered and a letter js sent\n     to Commissioner of Customs (Chennai-IV), Custom House, Chennai."\n\n\n33.9 The SCN is dated 15.09.2016.                 The adjudication was kept\n\npending on the repeated requests made by appellants that they were\n\ntaking steps with the DGFT authorities. The decision was passed by\n\nDGFT authorities approving the extension of time and condoning\n\nlapses in February and April 2019 as stated above. The adjudicating\n\nauthority has been in a hurry to pass the adjudication order so as to\n\ndeny to the appellants the benefits of the order passed by EPCG\n\nCommittee. In para 35.1 the adjudicating authority has extracted the\n\ncopy of the order passed by EPCG Committee on 13.2.2019. In para\n\n36.3 it is observed by the adjudicating authority that the appellant\n\nhas not produced EODC for the 14 licenses for which EOP (Extension\n\nof Period) is unconditionally granted. The discussions of adjudicating\n\nauthority is as under :\n                                            34\n        "36.3 Ashok Leyland Nissan claimed in their letter dated 25.3.2019 that\n        they have applied for various relaxations in respect of 26 EPCG licenses. But\n        from the Minutes of Meeting dated 13.2.2019 of EPCG Committee, it is\n        evident that the EOP extension was granted to 14 licenses with the\n        condition that RA shall verify the installation certificates and also status of\n        adjudication. No EODC (Export Obligation Discharge Certificate) is issued by\n        the RA with respect to the 14 licenses for which EOP is conditionally\n        granted. As per evidence available, no installation certificates with respect\n        to the 14 licenses were submitted. No proof of any submission made to RA\n        in this respect is adduced by Ashok Leyland Nissan. Hence, I find that though\n        EOP is extended by the EPCG Committee. RA had not ratified extension on\n        examination of installation certificates. The extension of EOP has not\n        attained validity and hence the conditions of notifications with respect to\n        fulfilment of EO and submission of installation certificates remained intact\n        for said 14 licenses also."\n\n\n33.10 The findings of the adjudicating authority is that though the\n\nperiod has been extended by two years, there is no evidence\n\nfurnished by appellants about the compliance of the conditions for\n\ngranting extension and also for fulfilment of EO. This view does not\n\nfind favour with us, as the order has been passed without waiting for\n\na reasonable period after coming to know of the decisions passed by\n\nthe EPCG and Policy Relaxation Committees.\n\n\n\n33.11    The Ld. Special Counsel, Sri Ponnusamy appearing for the\n\ndepartment has vehemently argued that as on the date of passing the\n\norder, there was no evidence before the adjudicating authority for\n\ncompliance of the conditions and therefore there is no error in\n\ncompleting the adjudication.           Another argument put forward by the\n\nLd. Counsel is that, the extension of two years has to be computed\n\nfrom the year 2016 which is the end of first block period. In that case\n\neven if extended, the EO cannot be considered as fulfilled as the\n\nappellants have fulfilled EO much later only.\n\n33.12     We have given careful consideration to the arguments of the\n\nSpecial Counsel. For better appreciation, the relevant part of the\n\ndecision of the EPCG Committee passed on 13.02.2019 is as under :\n                                                             35\nSl.No.   Firm's Name       and EPCG          Subject                              Decision of the EPCG Committee\n         Numbers               Authorisation\n                               No.\n13.      M/s.Ahok       Leyland    26        EPCG (i)       Permission for        8. In view of the above, the\n         Vehicles        Limited   authorisations shifting of capital goods in    Committee after deliberations was\n         (Formerly         Ashok                  respect         of       26     of the opinion that as far as 14 EPCG\n         Leyland Nissan Vehicles                  Authorisations to the           authorisations bearing numbers\n         Limited0                                 premises of M/s.Ashok           0430010495 dated 15.11.2011;\n         01/36/218/245/AM-                        Leyland Ltd. M/s.Ashok          0430010607 dated 13.12.2011;\n         17/EPCG-I                                Leyland Vehicles Ltd.           0430010683 dated 03.01.2012;\n                                                                                  17.01.2012; 03.02.2012; 09.02.2012;\n                                                                                  02.03.2012;               02.03.2012;\n                                                                                  0430010755 dated 02.03.2012;\n                                                    (ii)      The       earlier   0430010806 dated 0430010837\n                                                    installation of the Capital   0430010851                14.02.2012;\n                                                    goods covered from            0430010916 dated 0430010917\n                                                    Serial No.18 to 26 may be     0430010919         dated        dated\n                                                    condoned               and    0430010929         dated        dated\n                                                    regularized, however, at      0430010928 dated 06.03.2012;\n                                                    this stage all the capital    dated 06.03.2012; 0430010932\n                                                    goods covered from            dated 07.03.2012 and 0430010990\n                                                    Serial No.1 to 26 may be      dated 19.03.2012 where the goods\n                                                    allowed to be shifted to      were installed at the premises duly\n                                                    the       premises       as   endorsed on the authorisations and\n                                                    mentioned above;              the request is for only extension of\n                                                                                  the export obligation period to fulfil\n                                                                                  the export obligation, there is merit\n                                                    (iii)    That extension       in the request of the party to allow\n                                                    in EOP for 2 years may be     them such extension. On the other\n                                                    granted for all the 26        requests, the Committee decided\n                                                    Authorisations        for     not to take any decision at this stage\n                                                    fulfilment of EO.             as the of authorisations involved\n                                                                                  issues other than the extension in\n                                                                                  export obligation period also.\n\n\n\n                                                                                  9. The Committee, therefore,\n                                                                                  decided to recommend to DG for\n                                                                                  relaxation under Para 2.58 of\n                                                                                  FTP 2015-20 to allow:\n\n                                                                                  (a) extension of block-wise EOP in\n                                                                                  respect of fourteen EPCG\n                                                                                  authorisations mentioned above\n                                                                                  subject to payment of 2%%\n                                                                                  composition fee on the duty\n                                                                                  saved amount in proportion to\n                                                                                  the shortfall at the end of first\n                                                                                  block in terms of the provisions\n                                                                                  of Para 5.8.3 of HBP 2009-14.\n\n                                                                                  (b) extension of EOP for two\n                                                                                  years in respect of fourteen EPCG\n                                                                                  authorisations mentioned above\n                                                                                  on payment of composition fee\n                                                                                  equal to 2% of proportionate\n                                                                                  duty saved amount on the\n                                                                                  unfulfilled export obligation for\n                                                                                  each year of extension sought in\n                                                                                  terms of provisions contained in\n                                       36\n\n\n\n                                                      Para 5.11 of HBP 2009-14.\n\n                                                      (c) This shall be subject to\n                                                      payment of composition fee of\n                                                      Rs.       5000/-against  each\n                                                      authorisation for delay in\n                                                      applying.\n\n                                                      Further, RA to verify that these\n                                                      authorisations have not been\n                                                      adjudicated upon by the\n                                                      concerned customs authority and\n                                                      the party_has submitted the\n                                                      installation     certificate    from\n                                                      jurisdictional     Central    Excise\n                                                      Authority      (from       Chartered\n                                                      Engineer in case the party is not\n                                                      registered with Central Excise\n                                                      Authority).\n                                                      This has the approval of DG.\n\n\n\n33.13    The SCN has been issued in 2016 alleging the non-fulfilment\n\nof 50% EO, and diversion of capital goods. The appellants were\n\ninforming the adjudicating authority about the steps taken for getting\n\nextensions of time. Further on 25.03.2019, they submitted letter to\n\nthe adjudicating authority informing that they are in the process of\n\ncomplying with the conditions of the EPCG Committee's decision. This\n\nbeing so, it was incumbent upon the adjudicating authority to give the\n\nappellants reasonable time to comply with the conditions and should\n\nnot have passed the order in a hurried manner even without grant of\n\npersonal hearing. The EPCG Committee had not prescribed any time\n\nlimit for compliance of the conditions. The assessee is then supposed\n\nto comply within a reasonable time. The assessee has been diligent to\n\ncomply   within   a   time   period    of   about   three   months.      These\n\nauthorizations / EPCG licenses are issued as part of Foreign Trade\n\nPolicy for export benefits so as to earn foreign exchange for the\n\ncountry. The DGFT and Customs have to act hand in hand to give\n\neffect to the object of issuing such beneficial schemes. It should not\n\nbe a tug of war so as to drive the assessee from pillar to post and\n                                     37\n\n\n\ngetting their resources tied up in litigations. We therefore find that\n\nthe changed circumstances as to the extension of period and\n\ncompliance has to be taken into consideration.\n\n33.14 The EPCG Committee has not stated any time period to comply\n\nwit the conditions. There is no mention in the order of EPCG\n\nCommittee that the extension of two years is to be applied\n\nretrospectively. When there is no specific mention of such event in\n\nthe decision of EPCG Committee, the extension has to be construed\n\nas intended in the decision itself, which is nothing but extension of\n\ntime by two years to fulfil their export obligation.\n\n34.   The   adjudicating   authority     has   imposed   penalty   on   the\n\nsupporting manufacturers viz. M/s.Renault Nissan, M/s.Gestamp\n\nAutomotive Chennai, M/s.Myoung Shin India Automotive, M/s.Daejoo\n\nAutomotive, M/s.Global India Automotive, M/s. Magna Automotive,\n\nM/s.Caparo Engineering India on the ground of installation of\n\nimported capital goods in other premises. The competent authority\n\nvide decision dt. 02.04.2019 has condoned the infraction and\n\nregularized the installation. Hence we are of the view that the\n\npenalties imposed on these appellants cannot sustain and requires to\n\nbe set aside. Ordered accordingly.        The appeals filed by them viz.,\n\nC/41486/2019,      C/41530/2019,         C/41531/2019,    C/41532/2019,\n\nC/41568/2019, C/41569/2019, C/41570/2019 are allowed.\n\n35.   After appreciating the facts and evidence placed before us, we\n\nare of the view that the order passed by adjudicating authority\n\nwithout considering the relaxations, compliance and fulfilment of\n\nexport obligations so as to confirm the duty demand, confiscation and\n\nimposition of penalties on M/s.Ashok Leyland, the main appellant,\n\nrequires reconsideration. We therefore are of the opinion that the\n\nmatter requires to be remanded to the adjudicating authority who is\n                                       38\n\n\n\n   directed to consider the decisions passed by the Committees, the\n\n   compliances made by the appellants and the fulfilment of export\n\n   obligations and pass fresh order preferably within 3 months from the\n\n   date of receipt of this order.\n\n   36.   In the result, the impugned order is set aside in entirety. The\n\n   appeal C/41479/2019 is allowed by remand to the adjudicating\n\n   authority.\n\n\n                (Order pronounced in the open court on 02.11.2023)\n\n\n\n\n       sd/-                                           sd/-\n(VASA SESHAGIRI RAO)                       (SULEKHA BEEVI C.S.)\n  MEMBER (TECHNICAL)                         MEMBER (JUDICIAL)\n\n   gs