2006 (9) TMI 37 - AT - Customs

Recovery of DEPB credit - Alleged that appellant availed excess credit by misdecleration - Adjudicating authority made decision against the appellant and give direction to recover the excess credit lying with the appellant

Summary

Issues:
- Misdeclaration of use of preservatives in export products
- Confiscation of goods under Customs Act
- Demand of duty and interest under Customs Act
- Imposition of penalties under Customs Act
- Jurisdiction of Customs authorities in DEPB credit cases
- Role of DGFT in determining DEPB credit eligibility

Misdeclaration of Use of Preservatives:
The case involves an appellant-firm exporting fish products and availing DEPB credit by misdeclaring the use of preservatives as per Standard Input-Output norms. The investigation revealed that the appellants had not used the prescribed preservatives, leading to a demand for recovery of higher DEPB credit availed. The Commissioner held that the exported goods are liable for confiscation under the Customs Act, reclassified the goods for a lower DEPB rate, demanded duty, interest, and imposed penalties on the appellant.

Confiscation of Goods and Demand of Duty:
The Commissioner ordered the confiscation of goods under Sections 113(d) and 113(i) of the Customs Act, reclassified the goods for a lower DEPB rate, and demanded duty of Rs. 1,74,89,739 under Section 28(1) of the Customs Act. Additionally, interest under Section 28AB of the Customs Act was demanded, and penalties were imposed on the appellant and the managing partner of the exporting company.

Jurisdiction of Customs Authorities and Role of DGFT:
The appellant challenged the order, arguing that Customs authorities lacked jurisdiction to vary or reduce credit without referring to the DGFT for determining credit eligibility. They cited precedents where the Tribunal allowed appeals related to the recovery of excess DEPB credit by Customs authorities. The appellant emphasized that DGFT's role is crucial in determining DEPB credit eligibility, as per Circulars issued by the Government of India.

Decision and Analysis:
The Appellate Tribunal found that Customs authorities should only verify exporters' declarations, while the power to grant, modify, or recover DEPB credit lies with the DGFT. The Tribunal noted that misdeclaration should prompt Customs to inform DGFT for necessary action, as recovery of excess credit falls under DGFT's jurisdiction. The Tribunal allowed the appeals, directing Customs to contact DGFT for recovery actions, providing relief to the appellants while acknowledging potential further actions by competent authorities regarding DEPB credit.

This detailed analysis of the judgment highlights the misdeclaration issue, confiscation of goods, demand of duty, penalties imposed, the jurisdictional dispute between Customs and DGFT, and the ultimate decision of the Appellate Tribunal in favor of the appellants.