Legal principle

Where the importer has fulfilled the export obligation and the customs authorities themselves have accepted the EODC and cancelled the bonds executed under Section 143, duty demands confirmed solely on the premise of non-production of the EODC — whose issuance by the competent authority was beyond the importer's control — are not legally sustainable.

Court decision

The Tribunal held that the requisite compliance with the notification conditions had been fulfilled by the appellants and that the impugned order, to the extent it confirmed the duty demands along with redemption fine and penalty, was not legally sustainable; the impugned order was set aside and the appeal was allowed in favour of Ceat Limited.

Facts

Ceat Limited, a manufacturer of automobile tyres, imported capital goods valued at Rs.7,76,83,519/- under six Zero Duty EPCG Scheme Authorisations/Licences of 2013, executing bonds for Rs.5,01,55,222/- under Section 143 of the Customs Act, 1962, with duty foregone of Rs.1,79,12,579/-. The department found that Ceat had not produced the Capital Goods Installation Certificate on importation nor submitted the Export Obligation Discharge Certificate (EODC) required by notification No. 22/2013-Customs dated 18.04.2013. Accordingly, a Show Cause Notice dated 07.10.2024 was issued demanding the duty foregone of Rs.1,79,12,579/- with interest under the Section 143 bond, proposing confiscation of the imported goods under Section 111(o) and penalty under Section 112(a) of the Customs Act, 1962. The Commissioner of Customs (Export), Mumbai confirmed all proposals by Order-in-Original dated 22.05.2025, which Ceat challenged before the CESTAT.

Key provisions

• Section 143, Customs Act, 1962 — Power to allow import or export on execution of bonds in certain cases
• Section 3, Customs Tariff Act, 1975 — Levy of additional duty equal to excise duty, sales tax, local taxes and other charges