The Hindu Business Line : CBEC asks Customs to refrain from unilateral action on EPCG cases

THE Central Board of Excise and Customs (CBEC) has advised the jurisdictional commissioners of Customs to refrain from taking unilateral action on export promotion capital goods scheme (EPCG) cases where Customs has a doubt about the valuation of the imported capital goods or the export obligation.

Stating that all such cases should be referred to the Board, the CBEC has highlighted in a circular that the matter would then be taken up with the Directorate-General of Foreign Trade (DGFT) authorities concerned so that the necessary corrective action, if any, is taken simultaneously by Customs and DGFT.

The circular has pointed out that there is already a committee set up for this purpose in which CBEC is also represented.

This CBEC directive has been issued after it was brought to its notice that in some cases, despite the issuance of export obligation discharge certificate by the DGFT authorities, Customs formations had issued show-cause notices to the licence holder questioning the value of imported capital goods or the quantum of export obligation.

The adjudication order of the commissioner increasing the cost, insurance and freight (c.i.f.) value of imported goods in such cases were later struck down by the Customs Excise and Service Tax Appellate Tribunal (CESTAT) on the ground that such unilateral action by the Customs was bad in law.

"Unilateral action by the Customs in such cases may ultimately help the EPCG licence holder to escape the clutches of law because under EPCG Scheme both the Customs and DGFT authorities have important roles to play," the CBEC circular said.

The DGFT will have to simultaneously increase the c.i.f value of the EPCG licence and also the quantum of export obligation specified therein.

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