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2009 (4) TMI 394 - AT - CustomsEXIM- Marine products- The appellants exported fish and fish products under the DEPB Scheme. The DRI conducted certain investigations. On the basis of the investigations, proceedings were initiated against the appellants for mis-declaration in order to get higher DEPB credit. The allegation is that the appellants declared their products as processed, preserved and frozen under Sl. No. 2 of Export product group of DEPB product code No. 66 even though their export products were clearly classifiable under Sl. No. 1 as no preservatives as per Standard Input-Output Norms . The Adjudicating Authority confiscated the exported goods valued at Rs. 2,86,01,385/- under Section 113(i) of the Customs Act, 1962. He also confirmed the demand for payment of an amount of Rs. 8,58,042/-. Penalties were imposed on the company and its directors. The appellants were aggrieved over the above order. Therefore, they approached the Commissioner (Appeals). The Commissioner (Appeals) passed the impugned order upholding the demand and therefore, the appellants have come before this Tribunal for relief. Held that- the DGFT had not taken any adverse action against the appellants on the basis of the DRI report. In these circumstances, the impugned order, demanding the differential amount, interest and imposing penalties is not sustainable. As the issue is squarely covered by a plethora of decisions cited, we have no other option but to allow the appeals with consequential relief.
Issues:
1. Jurisdiction of customs authorities to question DEPB entitlement. 2. Role of customs authorities in verifying exporter's declaration. 3. Applicability of previous Tribunal and High Court rulings on similar cases. 4. Power of customs authorities to demand duty on mis-declaration. 5. Interpretation of CBEC Circulars regarding customs authorities' role. Analysis: Issue 1: Jurisdiction of customs authorities to question DEPB entitlement The appellants exported fish and fish products under the DEPB Scheme. Allegations were made against them for mis-declaration to obtain higher DEPB credit. The Adjudicating Authority confiscated the goods and imposed penalties. The appellants argued that customs authorities lack jurisdiction to question DEPB entitlement, citing the decision in Adani Exports v. AC of Customs. They emphasized that only DGFT has the power to determine DEPB credit and customs can act if DGFT modifies the credit. The Tribunal, in line with previous rulings, held that customs cannot demand duty based on mis-declaration when DGFT grants credit, and any violation should be reported to DGFT for action. Issue 2: Role of customs authorities in verifying exporter's declaration The appellants relied on CBEC Circulars to support their plea that customs authorities should only verify exporters' declaration regarding product details. They argued that the role of customs is limited to checking description, quantity, and value, while the licensing authorities, like DGFT, are responsible for ensuring correct credit rates. The Tribunal agreed with this interpretation, noting that the requirement to declare chemicals and preservatives in shipping bills was withdrawn. The impugned order demanding differential amounts and penalties was deemed unsustainable due to the absence of adverse action by DGFT. Issue 3: Applicability of previous Tribunal and High Court rulings The appellants cited various Tribunal and High Court decisions related to export of marine products under DEPB claims to support their case. They argued that these rulings, such as Alphonse Joseph v. CCE and Baby Marine Exports v. CCE, established that customs authorities lack jurisdiction to demand duty in such cases. The Tribunal found these rulings applicable to the present case and concluded that the impugned order was contrary to established precedents. Issue 4: Power of customs authorities to demand duty on mis-declaration Referring to the case of TTK Prestige Ltd. v. CC, the appellants contended that customs authorities cannot reduce excess DEPB credit, as only DGFT has that authority. They argued that the impugned order was wrong in law based on Supreme Court judgments, which held that authorities cannot take a contrary stand. The Tribunal agreed with this argument and found the impugned order unsustainable. Issue 5: Interpretation of CBEC Circulars regarding customs authorities' role The Tribunal analyzed CBEC Circulars dated 1997 and 2003 to determine the role of customs authorities in verifying export declarations. It was noted that customs authorities should focus on verifying exporters' declarations regarding product details, while the responsibility of ensuring correct credit rates lies with licensing authorities like DGFT. The withdrawal of the requirement to declare chemicals and preservatives further supported the appellants' argument that the impugned order was unsustainable. In conclusion, the Tribunal allowed the appeals, providing consequential relief to the appellants based on the issues discussed and the legal interpretations provided.
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