EPCG Benefits Restored for third party exports

In a significant ruling on the EPCG Scheme, the Chennai Bench of the CESTAT set aside customs duty demands, confiscation orders and penalties arising from allegations that EPCG licence holders had fraudulently discharged export obligations through third-party exports. 

The Tribunal held that third-party exports were a recognised mode of fulfilling export obligations under the prevailing Foreign Trade Policy and that Customs authorities could not disregard valid Export Obligation Discharge Certificates (EODCs) that had been restored and reaffirmed by the DGFT. 

The decision reiterates that, absent clear evidence of fraud, Customs cannot sit in appeal over determinations made by the statutory licensing authority under the FTDR framework.