No duty liability on Transition from EOU to EPCG Scheme if Export Obligations Fulfilled – CESTAT

The respondent was unable to fulfill the export obligation and applied to the Development Commissioner for permission to exit from the EOU Scheme to the EPCG Scheme under the Foreign Trade Policy, 2004-09. A show-cause notice was issued for the recovery of duty on imported and indigenously procured capital goods that were procured duty-free. The proceedings were dropped after adjudication, but the Revenue has challenged this decision before CESTAT. The CESTAT observed that the respondent had opted for the transition from the EOU Scheme to the EPCG Scheme and paid the duty after obtaining permission from the Development Commissioner. The proceedings were dropped by the adjudicating authority. The respondent fulfilled their export obligation and obtained an Export Obligation Discharge Certificate (EODC) after adjudication. Therefore, no further proceedings can be taken against the respondent. This decision is supported by the case law CCGST&E vs M/s National Aluminium Company Limited. When a No Dues Certificate and EODC are issued, there is no duty liability on the transition from EOU to EPCG Scheme.

Source Darda Advisors

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