2001 (10) TMI 616 - AT - Central Excise

Summary

Issues:
1. Interpretation of Policy Circular regarding DEPB benefits for export goods.
2. Retrospective application of Policy Circular in relation to export goods declared incorrectly.

Issue 1: Interpretation of Policy Circular
The case involved an appeal by an exporter against an order confiscating goods and imposing penalties for alleged mis-declaration under the Customs Act, 1962. The exporter claimed DEPB benefits for exporting garments made of netted fabrics, declaring them as "Nylon knitted readymade garments" under the Duty Exemption Pass Book Scheme. The Customs authorities found the goods to be mis-declared and proposed confiscation and penalties. The exporter relied on a Policy Circular by the DGFT stating that garments made from netted fabrics fall under knitted garments for DEPB benefits. The lower appellate authority held that the Circular had no retrospective effect and rejected the appeal. The Tribunal was approached challenging this decision.

Issue 2: Retrospective Application of Policy Circular
The exporter contended that the Policy Circular should apply retrospectively to their goods exported in March 1999, citing that the Circular clarified that garments made from netted fabrics are considered knitted garments for DEPB benefits. The respondent argued that fiscal legislation is generally not retrospective unless expressly provided. The DGFT Circular did not explicitly state retrospective application. The goods in question were found to be netted fabrics made by a thermal bonding process, not involving knitting. The Tribunal noted that the Circular did not have retrospective operation unless expressly provided. The Tribunal analyzed the EXIM policy and found no provision supporting retrospective application of the Circular. The Tribunal upheld the lower authority's decision, concluding that the Circular had only prospective operation, and the exporter failed to rebut this presumption.

In summary, the Tribunal ruled in favor of the Customs authorities, upholding the order of confiscation and penalties imposed on the exporter. The Tribunal held that the Policy Circular did not have retrospective effect and only applied prospectively. The exporter's reliance on the Circular was deemed insufficient to overturn the lower appellate authority's decision. The judgment emphasized the importance of explicit provisions for retrospective application in fiscal legislation and upheld the principle that in the absence of such provisions, laws operate prospectively.