ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 03.07.2025
Madras HC Affirms DGFT’s Authority on Capital Goods Classification Under EPCG
The Madras High Court reaffirmed that the Customs Department cannot override the classification of capital goods as determined by the DGFT under the Export Promotion Capital Goods (EPCG) Scheme. The Court held that the customs authorities are bound by the EPCG licence issued by the DGFT unless it has been withdrawn or proved fraudulent.
Background of the Case
The appellant, M/s. Adyar Gate Hotel Ltd., imported lighting equipment and fittings in 1999 under an EPCG licence issued by the DGFT, which categorically classified the goods as capital goods. Despite this, the customs authorities denied concessional duty benefit, claiming the goods did not qualify as capital goods under Notification No. 28/97-Cus dated 01.04.1997.
The case underwent prolonged litigation for over two decades, involving:
- Denial of concessional duty in 1999.
- Multiple rounds of appeals before the CESTAT.
- Remand by the CESTAT following CBEC Circular No. 62/2002, which favoured importers like hotels using goods for rendering services.
- Refund finally granted in 2018, but interest on delayed refund remained disputed.
This Article has been written by Shri Ravi Shekhar Jha, Advocate Delhi High Court based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
Source: Madras High Court
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