2006 (3) TMI 658 - AT - Customs

Summary

Issues: Jurisdiction of Customs authorities to deny DEPB credit, Entitlement to DEPB benefit on finished goods exported after debonding from EOU scheme, Applicability of DGFT decisions on DEPB benefit eligibility.

Jurisdiction of Customs authorities to deny DEPB credit:
The appellants, formerly a 100% EOU, were debonded and found to have taken DEPB credit on goods manufactured before debonding. The Customs authorities alleged non-disclosure of DEPB benefit and directed a show cause notice. The appellants argued that Customs had no jurisdiction to deny DEPB credit, contending it was under the authority issuing DEPB license. The Commissioner of Customs rejected this, holding the appellants ineligible for DEPB benefit on goods manufactured pre-debonding and imposed a penalty. The appellants challenged this decision.

Entitlement to DEPB benefit on finished goods exported after debonding:
The appellants claimed DEPB credit on goods exported post-debonding, citing a Joint Commissioner's order stating Customs lacked jurisdiction to disallow DEPB benefit. The appellants argued Customs had no authority to override DGFT's decision on DEPB credit eligibility, supported by various case laws. They emphasized DGFT's approval of DEPB benefit subject to paying applicable duties on raw materials used in exported goods.

Applicability of DGFT decisions on DEPB benefit eligibility:
The Tribunal upheld the appellants' argument, stating the DEPB credit was taken based on DGFT-issued licenses. The Tribunal acknowledged DGFT's requirement for payment of customs/central excise duties on raw materials used in manufacturing exported goods. It ruled that Customs could demand such duties but could not question the appellants' entitlement to DEPB benefit post-debonding. The Tribunal highlighted DGFT's jurisdiction over DEPB benefit decisions, supported by legal precedents. Consequently, the impugned order was set aside, and the appeal was allowed, emphasizing the DGFT's authority in determining DEPB benefit eligibility.

Conclusion:
The Tribunal's decision emphasized the exclusive jurisdiction of DGFT in determining DEPB benefit eligibility, rejecting Customs' authority to deny DEPB credit post-debonding. The judgment highlighted the importance of adhering to DGFT decisions on DEPB benefit subject to payment of applicable duties, ensuring a clear delineation of authority between Customs and DGFT in such matters.