2006 (3) TMI 501 - AT - Customs

Summary

Issues:
1. Excess DEPB credit availed by the appellants
2. Jurisdiction of Customs authorities in determining DEPB credit eligibility
3. Challenge against penalty imposed

Analysis:

Issue 1: Excess DEPB credit availed by the appellants
The appeal was made against the demand of duty due to an alleged excess DEPB credit of Rs. 4,42,109 availed by the appellants for goods exported under 16 shipping bills. The penalty of Rs. 5 lakhs imposed was also contested. The appellants argued that the Customs authorities wrongly assessed the DEPB credit eligibility, which falls under the jurisdiction of the DGFT. They emphasized that the FOB value of exports was fully realized, and no objections were raised by the licensing authority. Additionally, they referred to a Circular of the Board to support their claim that the export value was revised incorrectly by the Customs authorities.

Issue 2: Jurisdiction of Customs authorities in determining DEPB credit eligibility
Upon careful consideration, the Tribunal noted that as per the Board's Circular, if the declared FOB value is doubted, the Assistant Commissioner can determine the correct value after market inquiries and allow provisional clearance of exports. However, in this case, all exports were cleared without provisional clearance, and it was found that no benefit beyond what was prescribed in the DEPB scrips was availed by the assessee. The Tribunal held that the department's inquiries into the value of exports exceeded their jurisdiction. It was established through precedents that the eligibility for DEPB credit should be determined by the DGFT, not the Customs authorities.

Issue 3: Challenge against penalty imposed
Considering the circumstances, the Tribunal found that the appellants had a prima facie case against the Commissioner's order. Therefore, they granted a waiver of pre-deposit and a stay of recovery concerning the duty and penalty amounts. This decision was dictated and pronounced in open court, providing relief to the appellants based on the jurisdictional issues and procedural errors identified in the case.