2018 (1) TMI 836 - HC - Customs

Classification of export goods - DEPB benefits - whether the Tribunal in the earlier round of litigation has concluded the issue so far as the classification of goods for export benefits is concerned there being no material change in the circumstances and whether in facts of the present case writ jurisdiction should be exercised without relegating the petitioners to the appellate forum? Held that - The Tribunal was of the opinion that when for the purpose of DEPB Scheme the product is accepted as one of Alloy Steel Forging (Machined) as per the circular of CBEC for the purpose of Duty Drawback Scheme also it will carry the same classification - Even without the aid of the previous classification under DEPB Scheme and the CBEC circular the Tribunal s finding that the product was Alloy Steel Forging (Machined) and not Bearing Races would remain unshaken. The conclusions of the Tribunal are not based merely on the fact that previously for DEPB Scheme a certain classification claimed by the petitioners was accepted by the department. The Tribunal has come to independent findings based on voluminous evidence produced by the petitioners. Reference of the Commissioner in the present case that the petitioners had described the goods as Bearing Races for domestic clearances was also at issue before the Tribunal in the earlier round. In plain terms therefore the Commissioner was bound by the judgment of the Tribunal as confirmed by the Supreme Court. Relegating the petitioners to the appellate remedy would therefore be futile. Further the statute now requires a mandatory predeposit before filing any appeal. The petitioners would therefore have to deposit a sizeable amount with the department. This appeal thus comes with an onerous condition. In facts of the case therefore appeal cannot be stated to be an efficacious remedy. Petition allowed.

Summary

Issues Involved:
1. Classification of the product for DEPB benefits.
2. Binding effect of previous Tribunal and Supreme Court judgments.
3. Relegation to appellate remedy and its efficacy.

Detailed Analysis:

1. Classification of the Product for DEPB Benefits:
The petitioners challenged an order by the Principal Commissioner of Customs, Mundra, which classified their exported product under item no. 428 of the DEPB Schedule as 'Bearing Races' instead of item no. 68B as 'Alloy Steel Forging (Machined)'. The Commissioner confirmed a duty demand of ?1,63,00,000 with interest and penalties. The petitioners argued that the same product had previously been classified as 'Alloy Steel Forging (Machined)' under the Duty Drawback Scheme by the Customs, Excise & Service Tax Appellate Tribunal, a decision upheld by the Supreme Court. The petitioners contended that there was no material change to justify a different classification by the department.

2. Binding Effect of Previous Tribunal and Supreme Court Judgments:
The Tribunal had previously ruled in favor of the petitioners, determining that the product required further processing to be used as bearing races. This conclusion was based on various certificates and inquiries, including those from the Chartered Engineer and the Superintendent of Central Excise, which confirmed that the exported product could not be used directly as bearing races. The Tribunal's findings were independent and based on substantial evidence, and the Supreme Court dismissed the department's appeal, thereby confirming the Tribunal's judgment.

3. Relegation to Appellate Remedy and Its Efficacy:
The petitioners argued that the Commissioner was bound by the Tribunal's judgment and could not take a different view. They sought the Court's intervention to avoid the requirement of filing statutory appeals, which would necessitate a mandatory pre-deposit. The Court noted that the Tribunal had thoroughly examined the issue in the context of the Duty Drawback Scheme, and there was no material change in circumstances. The Commissioner’s reliance on the petitioners’ classification for domestic clearances had already been addressed by the Tribunal. The Court concluded that relegating the petitioners to the appellate forum would be futile and the mandatory pre-deposit made the appeal an onerous and ineffective remedy.

Conclusion:
The Court set aside the impugned orders dated 16.12.2016 and 30.11.2016, allowing the petitions. The Commissioner was found to be bound by the Tribunal's judgment, as confirmed by the Supreme Court, and the petitioners were not required to pursue an appeal, given the circumstances and the binding nature of the previous judgments.