2006 (5) TMI 253 - AT - Customs

Summary

Issues:
Interpretation of DEPB benefit eligibility for exported goods declared as cotton fabrics bleached with Dia Assorted; Determination of classification of impugned goods as Knitted Fabric (Hosiery) by the Department; Relevance of the decision of Hon'ble Patna High Court in a sales tax case to the present Customs and Excise law matter.

Analysis:
The appellants, as manufacturer/exporters, exported goods claiming DEPB benefit under Sl. No. 57 of DEPB rates schedule, declaring the product as 100% cotton fabrics bleached with Dia Assorted. However, the Department denied the benefit, asserting that the goods were Knitted Fabric (Hosiery) and not cotton fabrics, citing a decision of the Hon'ble Patna High Court. The appellants argued that cotton fabrics can be either Woven Fabric or Knitted Fabric, and the goods were examined as declared at the time of removal under supervision by Excise authorities. They contended that the Patna High Court decision was in a sales tax context and not applicable to Customs and Excise law.

Upon review, the Tribunal found that the DEPB schedule entry only mentions cotton fabrics without specifying Woven Fabric or excluding Knitted fabrics. Therefore, the benefit cannot be limited to Woven Cotton Fabrics only. Consequently, the appellants were deemed eligible for the DEPB benefits claimed under entry 57. As a result, the appeal was allowed, overturning the confiscation and penalty, and granting the appellants the DEPB benefit they had rightfully claimed.

In conclusion, the Tribunal's decision rested on the interpretation of the DEPB schedule entry, which did not restrict the benefit to Woven Fabric, thereby allowing the appellants to claim DEPB benefits for the exported goods declared as cotton fabrics bleached with Dia Assorted. The relevance of the Patna High Court decision in a sales tax case was dismissed, emphasizing that it did not apply to the Customs and Excise law matter at hand.