2008 (2) TMI 439 - HC - Customs

Benefit of DFEC (Duty Free Entitlement Certificate) scheme exemption under Notification No. 53/2003, dated 8-4-2005 in respect of Crude Soyabean Oil imported in July, 2006 (750 metric tons) denied - Held that - Petitioner has made out a prima facie case for a detailed examination of the contention raised in the petition that while the Department of Revenue Circular, dated 30-1-2004 provided that the products derived from agriculture including Crude Edible Oil shall not be permitted, the DGFT himself vide subsequent public Notice No. 42 of 2006, dated 6-1-2005 specifically permitted import of edible oils under the scheme through STC and MMTC. The petitioner is stated to have made inputs of Crude Soybean Oil through MMTC. Considering the contents of the said public notice dated 6-1-2005 issued by DGFT and the Department of Revenue Circular No. 10/2004-Cus., dated 30-1-2004 and also the contents of license dated 21-4-2006, we are of the view that the interests of justice would be served if interim stay of execution of the impugned order dated 9-1-2007 is granted on condition that the petitioner deposits 25% of the duty demanded under the impugned order.

Summary

Issues involved:
Challenge to denial of benefit under DFEC scheme exemption and demand of duty under Customs Act, 1962.

Detailed Analysis:

1. Challenge to denial of benefit under DFEC scheme exemption:
The petitioner challenged the order denying the benefit of DFEC scheme exemption for the import of Crude Soyabean Oil. The petitioner argued that the import was covered by the import license and exemption notification, but the Customs Department took a different view, demanding customs duty. The petitioner contended that the import of Crude Soybean Oil was not excluded under the scheme as it was derived from agricultural products, which were excluded. The petitioner also highlighted a specific amendment allowing the import of edible oils under the scheme through specified entities. The court found a prima facie case for detailed examination, considering conflicting circulars and notifications.

2. Demand of duty under Customs Act, 1962:
The Assistant Solicitor General argued that products derived from agriculture/dairy origin were not permitted as inputs under the DFEC scheme. He referred to a circular specifying that imported goods were to be used as inputs for manufacturing exported goods. The court noted the conflicting interpretations but granted interim relief, staying the execution of the impugned order subject to the petitioner depositing 25% of the demanded duty within two months. The court emphasized that the deposit would not prejudice the rights and contentions of the parties, indicating a balanced approach to the issue.

In conclusion, the judgment delves into the interpretation of relevant notifications, circulars, and the legal framework governing duty exemptions under the DFEC scheme. The court's decision to grant interim relief while maintaining a fair balance between the parties' interests showcases a nuanced understanding of the complex legal issues involved in the case.