Import of Rolls Royce Ghost - there is nothing that could be enforced as far as its plying within State of Karnataka or registration - such of these conditions which are read into licence & not found cannot be held to be violated: HC
By TIOL News Service
MUMBAI, FEB 04, 2017: AN EPCG Licence was issued to the Appellant under Chapter 5 of the Foreign Trade Policy, for import of one "Rolls Royce Ghost" at concessional rate of duty with obligation of export of services, namely "Hotel & Tourism related services" to be completed in 8 years. The condition sheet attached to the EPCG Licence mandated that the vehicle was to be registered for "tourist purpose only". The export obligation was to be fulfilled as per para 5.8 of the Hand Book of Procedure (HBP).
The Bill of Entry was thereafter filed for importing the car on payment of BCD @ 3% (concessional rate) by availing benefit of exemption of duty under Notification No.103/2009-Cus against the said EPCG Licence. A bond was submitted by the Appellant Company, which bound them inter alia to observe all conditions of the impugned Notification. The Bill of Entry was assessed under EPCG Scheme and the vehicle was cleared from Customs by endorsing the Bill of Entry for registration for Tourist purpose only.
On 23.05.2013, the Customs Preventive Unit commenced investigations with search/seizure and recording of statements. The vehicle was seized from the residential premises of Shri Prakash Shetty, CMD of the Appellant Company. It is the case of the Department that the Appellant had no intention to abide by the conditions of the EPCG licence, Exemption Notification No.103/2009-Cus and the Bond, and thus exemption was wrongly availed.
The SCN alleged suppression, collusion and malafide intention in importing the vehicle for personal use of the CMD. Inference is sought to be drawn from the statements of the Chief Security Officer, General Manager (Finance), General Manager, Front Office Manager, Driver, Cook and the CMD. The allegations were - that the vehicle was parked at the residence of the CMD of the Appellant Company, no log book was maintained for the movement of the vehicle, the fuel expenses were borne in cash by the CMD, Driver was on the payroll of a holding company of the Appellant and the Driver had not attended to any foreign nationals for any pick-up from or drop at Airport, or any other trip; All India Permit sign was not displayed on the car; transfer of registration from RTO Chitradurga to RTO Bangalore was a transaction of sale; address of Chitradurga was not declared to the DGFT; the vehicle was not mentioned on the official website of the Appellant Company and that a Visitor Pass sticker, not connected to the Hotel, was found in the car.
The allegations were upheld by the Commissioner of Customs (ACC), Mumbai and, therefore, the appellant filed an appeal before the CESTAT.
Revenue had also filed an appeal seeking enhancement of penalty.
The Bench in an elaborate order concluded thus -
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Cus - Notfn. 103/2009-Cus - Import of Rolls Royce Ghost - If the Central Govt. in its wisdom introduces a beneficial scheme under the FTDR Act, the benefit of such legislation is to be made available by the Customs department - Commerce Ministry is responsible for the issuance of the FTP and has the final say - no violation of any condition of the EPCG license, FTP or the Customs Notification - Benefit of notification available - Assessee appeals allowed, Revenue appeal dismissed: CESTAT
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While arriving at the aforesaid conclusion, the Bench made the following pertinent observations -
+ There is no condition stipulating to park the vehicle imported under EPCG scheme at a particular place, or to seek its registration only from any particular RTO office. Mere parking of the vehicle at a particular place cannot be considered as violation of actual user condition or proof of the usage of vehicle in a particular manner or of transfer of ownership.
+ Just like a "lift" imported under EPCG scheme can be used by every guest, CMD and staff of the Hotel without violating the actual user condition, there cannot be any impediment in use by them of the vehicle imported under EPCG scheme in connection with "Hotel and Tourism related services", as long as the vehicle is also used in providing these services in discharging the export obligation.
+ It is not mandatory that the Hotel of the Appellant Company should have charged separately for the use of the vehicle; to collect money in foreign exchange specifically under the head of transportation charges with separate accounting of the same.
+ The Driver whose statement was recorded has been driving four different vehicles and was not kept to exclusively drive the subject vehicle. This driver cannot be presumed to be competent to identify the nationality of the guests. Guests of Indian origin from Asian countries do not look different from resident Indians. Further, the non-resident Indians are also bound to spend in foreign exchange during the short periods of stay in India. Hence no conclusive inference can be derived from the version of the driver.
We reported this order as 2015-TIOL-976-CESTAT-MUM.
Thoroughly aggrieved, the Revenue had filed an appeal in the Bombay High Court.
The High Court after visiting the facts of the case observed -
+ The Tribunal found that eight years' time was given for completing the obligations under the EPCG. Within a period of two and half years, the Revenue proceeded against the assessee.
+ The Department could not prove that the actual user condition has been violated by disposing of or transferring the vehicle by sale or lease or in any other manner before completing the export obligation.
+ There is no condition and which can be found to be violated by mere parking of a vehicle. If the vehicle has been imported, there is nothing that could be enforced as far as its parking or its plying within the State of Karnataka or its registration with a particular Regional Transport Office. Therefore, such of these conditions which are read into the licence and not found cannot be held to be violated.
+ The Tribunal's finding of fact from paragraphs 11 to 13 leaves us in no manner of doubt that the appreciation of the evidence is in accord with the settled principles. There is absolutely no question of the appraisal or appreciation of the evidence being contrary to the settled principles or perverse.
+ The Tribunal has gone condition-wise and the alleged violation thereof. It is clear that the vehicle has been brought by somebody in a hotel and tourism related service. That the vehicle was also displayed at the hotel and was used at times by the assessee for his business related activities cannot be, therefore, said to be a violation.
+ In paragraphs 18 and 19, the alleged act of the vehicle being used by one Prakash Shetty was considered and in paragraph 20 a reference is made in great details to his statement. Once there is a complimentary package and that is the reason why the vehicle is parked at the hotel and to attract tourists and visitors, we do not see how the Tribunal's appreciation and of a factual aspect can be faulted.
The Revenue appeal was dismissed on the ground that it did not raise any substantial question of law.
(See 2017-TIOL-231-HC-MUM-CUS)
