ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 21.11.2025
CESTAT Delhi Upholds Fulfillment of Export Obligations Under EPCG Scheme
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.β β
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, recently delivered a significant judgment in the case of Interglobe Enterprises Limited vs. Commissioner of Customs, New Delhi. This case revolved around the import of three cars under the Export Promotion Capital Goods (EPCG) scheme and the fulfillment of export obligations. β The decision, pronounced on November 20, 2025, has far-reaching implications for businesses operating under the EPCG scheme and highlights the interplay between customs authorities and the Directorate General of Foreign Trade (DGFT).
Background of the Case
Interglobe Enterprises Limited, engaged in the tours and travel services business, imported three cars under the EPCG scheme, availing concessional customs duty benefits. The company claimed that the cars were used for tourism-related services to earn foreign exchange, thereby fulfilling the export obligations under the scheme. β While the DGFT issued Export Obligation Discharge Certificates (EODCs) for two licenses, the third license’s EODC was delayed due to investigations initiated by the Directorate of Revenue Intelligence (DRI). β
The DRI alleged misuse of the imported cars and non-compliance with EPCG scheme conditions, leading to a demand for customs duty, interest, and penalties. β The Commissioner of Customs upheld these allegations, prompting Interglobe Enterprises to file an appeal before the CESTAT. β
Key Arguments and Findings
- DGFT’s Role in Export Obligation Certification: The appellant argued that the DGFT, as the competent authority, had already issued EODCs for two licenses and clarified that export obligations could be fulfilled through foreign exchange earnings from tourism-related services, not exclusively from the use of imported cars. β The Tribunal agreed, emphasizing that the issuance of EODCs by DGFT is determinative of export obligation fulfillment. β
- Registration of Imported Cars: The DRI contended that the cars were registered as private vehicles, not commercial/tourist vehicles, violating EPCG scheme conditions. β However, the Tribunal noted that the requirement for commercial registration was introduced only in 2006, whereas the cars were imported between 2001 and 2003. β Thus, the registration as private vehicles did not invalidate the appellant’s compliance with the scheme. β
- Use of Imported Cars for Tourism Services: The Tribunal examined whether the foreign exchange earnings were directly attributable to the use of the imported cars. β It concluded that the appellant had provided tourism-related services, including transportation, hotel accommodation, and food, as part of an overall package. The DGFT had clarified that such earnings could be considered for export obligation fulfillment, further supporting the appellant’s case. β
- Applicability of the Surya Samundra Case: The department relied on the Supreme Court’s decision in the Surya Samundra Holiday Resorts Pvt. β Ltd. case, which emphasized direct use of imported capital goods for fulfilling export obligations. β However, the Tribunal distinguished the facts of the present case, noting that the cars were used for tourism services and not transferred or misused, unlike in the Surya Samundra case.
- Time-Barred Demand: The appellant argued that the demand was time-barred, as the cars were imported between 2001 and 2003, and the show cause notice was issued in 2006. β The Tribunal agreed, finding no evidence of willful misrepresentation or suppression of facts by the appellant.
Final Decision
The Tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellant. β It reaffirmed the principle that once EODCs are issued by DGFT, they are deemed to signify the completion of export obligations. β
Implications of the Judgment
This landmark decision underscores the importance of DGFT’s role in certifying export obligation fulfillment under the EPCG scheme. β It clarifies that customs authorities cannot override DGFT’s certification without valid reasons. β Additionally, the judgment highlights the need for clear and consistent policy guidelines to avoid disputes over compliance with EPCG scheme conditions.
Key Takeaways for Businesses
- EODC as a Determinative Factor: Businesses can rely on EODCs issued by DGFT as conclusive proof of export obligation fulfillment, provided there is no evidence of misuse or fraud. β
- Clarity on Registration Requirements: The judgment provides clarity on the registration of vehicles imported under the EPCG scheme, emphasizing that conditions introduced after the import cannot be applied retrospectively. β
- Holistic View of Export Earnings: The Tribunal recognized that foreign exchange earnings from tourism-related services, including transportation, hotel accommodation, and food, can be considered for export obligation fulfillment.
Conclusion
The CESTAT’s decision in Interglobe Enterprises Limited vs. Commissioner of Customs is a significant milestone in the interpretation of the EPCG scheme. β It reinforces the principle that businesses operating under the scheme must be given the benefit of clarifications issued by DGFT and ensures that compliance is assessed fairly and transparently. β This judgment will undoubtedly serve as a guiding precedent for similar cases in the future.
Source: CESTAT Delhi
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