The Hon'ble Hyderabad CESTAT in the case of M/s SRI HAVISHA HOSPITALITY & INFRASTRUCTURE LTD Vs COMMISSIONER OF CUSTOMS, HYDERABAD [2026-VIL-371-CESTAT-HYD-CU] dwelt with the Act of Impossibility for EO under EPCG Licenses, due to seizure of machinery itself.
This case is a strong precedent for arguing that impossibility due to government action (seizure) cannot be equated with willful non-compliance. Here are the key pointers:
Key Legal Takeaways
- Act of Impossibility: Courts and tribunals recognize that if machinery is seized, the exporter cannot reasonably fulfill export obligations. This makes penalties and confiscation questionable.
- Notification 28/97 Condition 3: Duty computation must consider permissible exports already made, and depreciation of capital goods. Ignoring these factors makes the demand unsustainable.
- Procedural Fairness: Orders passed without hearing the appellant or considering pending requests (extensions, third-party exports, depreciation) are legally vulnerable.
- Outcome: In such cases, confiscation and penalties are often set aside, and matters remanded for proper re-computation of duty, acknowledging impossibility rather than deliberate default.
Compliance Insight for businesses operating under EPCG
- Always document external factors (like seizure, market conditions) that prevent fulfillment of obligations.
- File timely requests for extensions, third-party exports, and depreciation-based duty computation.
- If penalized, challenge on grounds of natural justice and notification-specific provisions
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