Order Date – 11 September 2023

Parties: Isgec Heavy Engineering Ltd Vs C.C.-Ahmedabad

Facts –

• The Appellant, Isgec Heavy Engineering Ltd, is engaged in manufacturing heavy machinery, it filed a bill of entry for import / procurement of imported capital goods viz. Plate Bending machine Model.
• They have cleared some goods to it sister concern unit (A DTA buyer) in terms of Rule 48(1) of the Special Economic Zone Rules, 2006, read with Section 30 of the SEZ Act, 2005. The clearance of the said capital goods under EPCG scheme was allowed under provisional assessment as per provisions of SEZ Act/Rules.
• It was alleged that appellant has not exited from Special Economic Zone and they were not eligible for clearing the capital goods under the prevailing Export Promotion Capital Goods Scheme, as removal of capital goods from SEZ unit under EPCG is only available as per the Rule 74(4) of the SEZ Rules, 2006.

Issue –

• Whether the goods can be cleared under EPCG scheme?

Order –

• The Tribunal observed that it is clear that the SEZ rules have made exiting of capital goods under the EPCG Scheme as one time option. Therefore, during the currency of the operations of an SEZ, while it is allowed to remove goods including capital goods to the DTA area, the same can normally be on applicable customs duty and not under EPCG Scheme.
• When the legislature has made a special provision by mentioning a particular export promotion Scheme to be availed only at the time of exit, same cannot be allowed to be freely availed at any time under a provision in which there is no prescription of capital goods to be cleared under EPCG Scheme is available.
• Therefore in the present instance, stipulation of one time availment of EPCG Scheme at the time of exit cannot be read as permitting availment of EPCG Scheme under Rule 34 of SEZ Rules, 2006. Particularly under expression “on license” appearing in that Rule.
• Switchover thus from one scheme to another of capital goods needs to be construed strictly through specific mandate of the legislature and not liberally. E.P.C.G. till exit from SEZ unit is not available, nor has appellant produced any such mandate or opinion from administrative authorities like Dev. Commissioners approving such availment by customs.
• Accordingly the appeal is dismissed.