2018 (8) TMI 1307 - HC - Customs

Interpretation of statute - correct interpretation of the term preserved - export under duty entitlement scheme - Contention of the Customs Department was that the exporters did not use any chemical preservatives and hence, there is no processing or preservation effected on the goods so exported by them. Held that - Drying of marine products and freezing the meat is one method of preservation - Since Sl.No.2 specifically speaks about the processed preserved and frozen marine products, the export of which is undertaken by the respondents herein. The description of the goods as claimed by the respondents is only proper for the purpose of granting duty entitlement. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Correct duty entitlement for exporters of marine products for human consumption.

Analysis:
The batch of appeals before the court arose from a common order of the Customs, Excise & Service Tax Appellate Tribunal, South Zonal Bench, concerning the correct duty entitlement of exporters engaged in exporting marine products for human consumption. The duty entitlement was granted under Annexure H, with amendments to the description of export products under Appendix 28A. The main issue revolved around the classification of goods under Sl.No.2 entitled to 5% duty entitlement by exporters, while Customs Authorities argued for a 2% duty entitlement under Sl.No.1, contending that the goods were not processed or preserved due to the absence of chemical preservatives.

The Tribunal delved into the interpretation of the term "preserved" to determine the correct duty entitlement. It was established that exported marine products for human consumption inherently required some level of preservation, although the method or use of preservatives was not explicitly mandated. The Customs Department raised concerns regarding the absence of preservatives or chemicals specified in the Standard Input-Output Norms (SION). Subsequently, an investigation by the Directorate of Revenue Intelligence (DRI) was initiated, and the matter was presented to the Director General of Foreign Trade (DGFT) for consideration.

The DGFT, exercising quasi-judicial powers under the Foreign Trade (Development and Regulation) Act, 1992, reviewed the case and emphasized that the SION was a broad classification without specific requirements for the presence of certain products in exported goods to qualify for duty entitlement. The DGFT clarified that the primary consideration for granting Duty Entitlement Pass Book (DEPB) was to confirm whether the exported goods matched the description in the DEPB schedule. Additionally, the Tribunal examined Circular 45 of 2003 issued by the Government of India, highlighting industry practices and the withdrawal of the requirement for a declaration on chemical usage in shipping bills under the DEPB scheme from 01.04.2003.

Ultimately, the court found no legal issue warranting interference with the Tribunal's order, as the description of goods under Sl.No.2 aligned with the processed, preserved, and frozen marine products exported by the respondents. Consequently, the court declined to entertain the appeal and upheld the Tribunal's decision, confirming the duty entitlement granted to the exporters.

In conclusion, the judgment focused on the correct interpretation of the term "preserved" concerning duty entitlement for exporters of marine products, emphasizing the absence of specific requirements for chemical preservatives in the SION and the alignment of exported goods with the description under Sl.No.2 for duty entitlement.