Subsequent EODC and bond cancellation render EPCG duty demand, redemption fine, and penalty unsustainable.

CEAT Limited imported capital goods under six zero-duty EPCG authorisations for manufacture and export of automobile tyres.

The imports were valued at approximately ₹7.76 crore, with duty foregone of ₹1.79 crore, secured by bonds executed under Section 143 of the Customs Act, 1962.

The appellants were required to submit installation certificates and Export Obligation Discharge Certificates (EODCs) evidencing fulfilment of the export obligation under the applicable EPCG notification.

Customs issued a show-cause notice proposing recovery of the duty foregone with interest, confiscation under Section 111(o), and penalty under Section 112(a), on the ground that the requisite documents had not been produced.

The Commissioner confirmed the proposals by order dated 22 May 2025.

During the appeal, CEAT produced installation certificates issued by the jurisdictional Central Excise authorities and EODCs issued by the DGFT.

The Customs authorities subsequently accepted the EODCs and cancelled the bonds relating to all six EPCG authorisations on 9 April 2026.

1. Whether the appellants had fulfilled the installation and export-obligation conditions applicable to the six EPCG authorisations by producing the requisite installation certificates and EODCs

2. Whether the demand for duty foregone, along with redemption fine and penalty, was sustainable when the EODCs were subsequently issued by the DGFT and the Customs authorities cancelled the corresponding bonds

The Tribunal applied Section 143 of the Customs Act, 1962, under which duty exemption may be secured through a bond subject to fulfilment of prescribed conditions; Section 111(o), concerning confiscation of goods where exemption conditions are contravened; and Section 112(a), concerning penalty for acts rendering goods liable to confiscation.

The applicable EPCG exemption notification required fulfilment of the export obligation and submission of supporting documentation, including installation certification and the EODC.

The Tribunal relied on Alca Technologies v. Commissioner of Customs, Nhava Sheva-IV, 2019 (369) E.L.T. 1447 (Tri.-Mumbai), which held that where an EODC application is pending before the licensing authority, Customs should ordinarily await the licensing authority’s decision rather than determine non-compliance prematurely; once the certificate is issued, the matter must be decided in light of the evidence of fulfilment.

The Tribunal found that installation certificates covering the imported capital goods had been issued by the jurisdictional Central Excise authorities.

Although the EODCs were unavailable when the Commissioner adjudicated the show-cause notice, the appellants had already applied to the DGFT and had completed the export obligation; the delay in issuance of the certificates was attributable to the competent authority and was therefore beyond the appellants’ control.

Applying the principle in Alca Technologies, the Tribunal held that adjudication based solely on the temporary non-production of an EODC was premature.

More importantly, Customs itself subsequently accepted the EODCs and cancelled all six bonds.

This created an apparent contradiction: the same Customs authorities had both confirmed duty for non-submission of EODCs and later accepted those certificates and cancelled the bonds.

In these circumstances, the factual basis for the duty demand, confiscation-related consequences, and penalty no longer survived.

The Order-in-Original dated 22 May 2025 was set aside in its entirety, and the appeal was allowed in favour of CEAT Limited.