2011 (4) TMI 1192 - AT - Central Excise

DEPB licence - whether prior to amendment on 27.1.06, the paper exported in reels and rolls also satisfied the description under entry 459B of DEPB schedule? - Commissioner has held that the export have been misdeclared and DEPB scrips have been sought for and obtained fraudulently and imports have been made using invalid DEPB scrips - Held that - Unable to agree with the findings of the Commissioner in this regard as it is not the case of the department that DEPB scrips are forged ones and not issued by the competent DGFT authorities. It is the case of the department that there was misdeclaration at the time of the export and based on misdeclaration contained in the shipping bills DGFT issued DEPB scrips wrongly. If it was felt so, it would have been appropriate that the customs authorities should have taken steps to get the DEPB scrips cancelled by making reference to the DGFT authorities who issued the scrips. Without taking any such action, to say that the DEPB scrips issued by competent authorities are invalid is not proper and legal. It is also not in dispute that the clarification were sought for by the department also and DGFT have clarified that the exports made by the appellants prior to 27.1.06 were eligible for benefit of DEPB under serial no 459B. In favour of assessee.

Summary

Issues:
1. Misdeclaration of exported goods under DEPB scheme.
2. Confiscation of goods and imposition of penalties.
3. Validity of DEPB scrips and duty on imported goods.

Analysis:
1. The appeals involved the issue of misdeclaration of exported goods under the DEPB scheme. The appellants exported writing and printing paper in rolls and reels, claiming DEPB benefit against entry 459B of the DEPB schedule. The customs authority alleged that the goods exported were not 'in cut sizes' as required by the DEPB schedule. The Commissioner confirmed the demand of duty, imposed penalties, and held the goods liable for confiscation.

2. The judgments in both appeal cases detailed the confiscation of imported goods, imposition of redemption fines, confirmation of customs duty demands, interest, and penalties. The Commissioner held that misdeclaration occurred during export, leading to the wrongful use of DEPB scrips for duty-free imports, justifying the confiscation and penalties imposed.

3. The validity of DEPB scrips and duty on imported goods was a crucial issue. The appellants argued that their exports were correctly declared, and the DGFT clarified that goods exported before a specific date were eligible for DEPB benefits. They contended that the customs authorities lacked jurisdiction to question the validity of DEPB licenses. Citing legal precedents, they emphasized that once DEPB licenses were issued, customs authorities could not dispute their validity.

4. The Tribunal analyzed the pre and post-amendment descriptions of entry 459B of the DEPB schedule. They disagreed with the Commissioner's findings, stating that the DEPB scrips were valid and not canceled by the competent authorities. As the DGFT confirmed the validity of the DEPB scrips for exports made before a certain date, the Tribunal found no basis for duty demand, confiscation, or penalties. Consequently, the impugned orders were set aside, and the appeals were allowed with consequential relief as per law.