Case Law Details

Case Name : Solar Soles Private Limited Vs Commissioner of Customs (CESTAT Chennai)
Appeal Number : Customs Appeal No. 40870 of 2021
Date of Judgement/Order : 03/11/2023
Related Assessment Year :

Solar Soles Private Limited Vs Commissioner of Customs (CESTAT Chennai)

In a recent Customs case, Solar Soles Private Limited challenged an Order-in-Original by the Commissioner of Customs (CESTAT Chennai). The dispute revolved around the fulfillment of Export Obligations under EPCG Authorizations. The appellant argued for the verification of the Export Obligation Discharge Certificate (EODC) before confirming Customs duty demands.

Background: Solar Soles Pvt Ltd imported capital goods under EPCG Authorizations, availing Customs duty benefits. The dispute arose when the Revenue doubted the fulfillment of Export Obligations, leading to a Show Cause Notice proposing duty demands.

Appellant’s Defense: The appellant asserted compliance with Export Obligations and highlighted the issuance of a redemption letter for one Authorization. For the remaining three, they submitted applications and documents but received no response. The appellant requested the Revenue to await EODC issuance.

Adjudication and Order: Despite the appellant’s submissions, the adjudicating authority confirmed duty demands for three Authorizations. The order prompted Solar Soles Pvt Ltd to appeal to the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT Chennai).

CESTAT Decision: After hearing both parties, CESTAT Chennai set aside the impugned order. Recognizing the appellant’s submission of EODC for one Authorization and acknowledgment of submissions for others, CESTAT directed the adjudicating authority to verify the EODC’s authenticity.

Conclusion: The CESTAT’s decision to remit the matter for EODC verification indicates a fair approach. The appellant, Solar Soles Pvt Ltd, awaits potential benefits upon establishing compliance with Export Obligations. This case underscores the importance of procedural fairness and the need for thorough verification before confirming duty demands in Customs matters. The outcome will depend on the adjudicating authority’s scrutiny of the EODC and subsequent legal entitlements.


Brief facts, as could be gathered from the Order-in-Original, are that the appellant had obtained EPCG Authorization No. 0430005349 dated 11.09.2007, No. 0430009614 dated 02.03.2011, No. 0430005998 dated 31.03.2008 and 0430002391 dated 28.02.2005 from JDGFT / ADGFT, Chennai and imported capital goods valued at Rs.4,78,75,862/- involving Customs duty of Rs.85,27,491/- by availing the benefit of Customs Notifications Nos. 97/2004 dated 17.09.2004, 102/2009 dated 11.09.2009 and 55/2003 dated 24.07.2003 by registering the said EPCG Authorizations with the Customs.

1.2 It appears that the appellant had filed various Bills-of-Entry, as could be seen from the Table under paragraph 1 of the impugned order, under the said EPCG Licences. The appellant-importer had executed a bond for Rs.1,11,25,474/- with an undertaking that they would fulfil the Export Obligation as prescribed in the above said Notifications for the said EPCG Authorizations, failing which they would pay back the Customs duty along with applicable interest.

2. The Revenue entertaining a doubt that the importer had failed to fulfil the Export Obligation as they did not produce any discharge/redemption certificate from the ADGFT authorities within the prescribed time under the said Notifications read with the conditions of the EPCG Authorizations as also the conditions of the bond executed by them, issued a Show Cause Notice dated 17.12.2020 to the appellant proposing to confiscate the capital goods valued at Rs.4,78,75,862/- imported under the aforesaid EPCG Licences under Section 111(o) of the Customs Act, 1962, to demand the total Customs duty of Rs.85,27,491/- for non-fulfilment of Export Obligation with further proposals to charge applicable interest and penalty under Section 112(a) of the Customs Act, 1962.

3.1 Thereafter, it appears that vide mail dated 18.01.2021, the appellant had inter alia informed that the EODC for EPCG Licence No. 0430002391 dated 28.02.2005 had been obtained, but was missing; that the concerned staff dealing with the matter had abruptly resigned from the job, subsequently they had located the documents and filed the same with the DGFT, for which they had also attached acknowledgement. It also appears that during personal hearing, the appellant has stated that for Licence No. 0430002391 dated 28.02.2005, redemption letter was granted and that for the Licences No. 0430005349, No. 0430009614 and No. 0430005998, documents had been submitted to the DGFT in December 2020, but however, no reply had been received by the appellant.

3.2 Subsequently, vide mail dated 22.02.2021, the appellant appears to have inter alia intimated the Department that they had been pursuing with the JDGFT, Chennai to speed up the process and requested for grant of 60 days’ time to obtain the EODC, while enclosing a copy of the acknowledgement issued by the ADGFT.

4. The adjudicating authority, having considered the explanations offered by the appellant, however, proceeded to pass the Order-in-Original No. 81664/2021 dated 23.03.2021 wherein he has confirmed the proposals in the Show Cause Notice in respect of EPCG Licences No. 0430005349 dated 11.09.2007, No. 0430009614 dated 02.03.2011 and No. 0430005998 dated 31.03.2008, while dropping the proceedings initiated against EPCG Licence No. 0430002391 dated 28.02.2005 in view of the redemption letter dated 14.09.2007 issued by the DGFT, Chennai for the same.

5. Aggrieved by the confirmation of demands as above, the appellant has filed the present appeal before this forum.

6. Heard Shri Sethu Prabakaran R., Ld. Advocate for the appellant-importer and Shri R. Rajaraman, Ld. Assistant Commissioner for the Revenue.

7. The contentions of the appellant could be summarized as under: –

  • The appellant fulfilled the Export Obligation in respect of all the four EPCG Licences mentioned above.
  • In respect of the EPCG Authorization No. 0430002391 dated 28.02.2005, the Zonal JDGFT, Chennai issued a redemption letter. In respect of the remaining three Authorizations, although the appellant had submitted all the required application along with documents for issuance of discharge/redemption certificate, but there was no reply from the authority in respect of the same.
  • The appellant has received redemption letters dated 14.09.2007, 15.12.2021, 05.01.2022 and 05.01.2022 in respect of EPCG Licence No. 0430002391 dated 28.02.2005, EPCG Licence No. 0430009614 dated 02.03.2011, EPCG Licence No. 0430005349 dated 11.09.2007 and EPCG Licence No. 0430005998 dated 31.03.2008 respectively, copies of which have been placed on record.
  • The appellant had requested the Revenue to await the issuance of EODC, but the adjudicating authority has passed the impugned order confirming the demands.

8. Per contra, the Ld. Assistant Commissioner defended the order of the lower authority, but however, since the importer has obtained EODC, the same is required to be verified by the adjudicating authority.

9. After hearing both sides, we are of the view that the matter has to be verified by the adjudicating authority, for which reason we set aside the impugned order and remit the issue to the adjudicating authority for the limited purpose of verification and thereafter grant such benefits to the appellant, as the appellant may be entitled to, in law, consequent to the production of EODC.

10. The appeal is disposed of on the above terms.

(Order pronounced in the open court on 03.11.2023)

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