2016 (5) TMI 557 - SC - Customs

Entitlement of benefit under Notification No. 07/2002-2007 dated 05.06.2002 - DEPB benefit in lieu of drawback claimed - Supplies from DTA to SEZ units - Held that - by reproducing the language of Notification dated 05.06.2002, it uses the expression that the Central Government hereby amends/corrects the Export and Import Policy 2002-2007. Thus it is, clear that insofar as the amendment is concerned, that was made effective by the issuance of this notification. Further, as is clear from the said notification, it was issued in exercise of the powers conferred upon the Central Government by Section 5 of the Act. It is, thus, a statutory notification whereby the EXIM Policy 2002-2007 was amended. With the issuance of such a notification, amendment came into effect from the date of issuance of the notification, i.e., 05.06.2002 and this notification, inter alia, made the exporters who make supplies from DTA to SEZ eligible to claim benefit of DEPB in lieu of drawback for supplies made to SEZ or unit in SEZ. Insofar as the Circular No. 25/2003 dated 01.04.2003 is concerned, it is only administrative in nature. It prescribed the procedure/requirements that were to be fulfilled for claiming the benefit of DEPB in lieu of drawback. By administrative circular, notification dated 05.06.2002 which was passed under Section 5 of the Act, could not be altered as that would amount to amendment of the notification and it was not within the powers of the Customs Authorities to alter the said date. Moreover, this is only a procedural circular which stipulates the conditions/ procedure that had to be followed for claiming the benefit of DEPB. Therefore, the impugned order is set aside and the appellant shall be entitled to the benefit of DEPB benefit in lieu of drawback as claimed by him. - Decided in favour of appellant

Summary

Issues:
Challenge to correctness of orders by High Court denying benefit under Notification No. 07/2002-2007 dated 05.06.2002 for supplies made to SEZ or unit in SEZ.

Analysis:
The appellant challenged the High Court's dismissal of the writ petition seeking benefits under Notification No. 07/2002-2007 dated 05.06.2002, which amended the Export and Import Policy 2002-2007. The Notification allowed DEPB benefits in lieu of Drawback for supplies to SEZ units from DTA. The Customs Department issued Circular No. 25/2003 detailing the procedure for availing DEPB benefits. The appellant made supplies to SEZ units after the Notification but before the Circular's effective date. The High Court held that benefits were applicable only from the Circular's date, reasoning that no procedure was prescribed earlier. However, the Supreme Court found this reasoning flawed.

The Supreme Court emphasized that the Notification dated 05.06.2002 was statutory and amended the EXIM Policy, making exporters eligible for DEPB benefits for supplies to SEZ units. The Circular dated 01.04.2003 was administrative and outlined the procedure for claiming DEPB benefits. The Court clarified that the Circular could not alter the Notification's effective date or amend it. The authorities could set conditions for claiming benefits but could not delay entitlement from the Notification's date. Thus, the Court allowed the appeal, setting aside the High Court's order and directing the appellant to be granted DEPB benefits in accordance with the Notification, subject to fulfilling necessary conditions within two months.