2022 (11) TMI 267 - AT - Customs

Wrongful availment of benefit of DEPB - product manufactured and exported by the appellant falls under Sr.No.1 of group code no.66 under the description of Fish Fish Products including frozen meat or not - recovery under proviso to section 28(1) of the Customs Act, 1962 along with interest and penalty - HELD THAT - Earlier this matter was remanded by this tribunal to pass a denovo order after consideration of DGFT s clarification vide letter dated 09.01.2009. The adjudicating authority though considered the said letter dated 09.01.2009 but the same was discarded on the ground that the decision by the DEPB Committee earlier will prevail. In view of the change of circumstances by way of clarification issued by the DGFT and withdrawal of the show cause notice, there was no scope for adjudicating authority to deviate from the decision taken by the DGFT to classify the goods under DEPB Entry at Sr.No.2/66 therefore, the adjudicating authority has no authority to sit over the policy decision taken by the DGFT. The clarification given by the DGFT will prevail over the allegation made by the Customs Department - the entire adjudication order passed discarding the decision taken by the DGFT cannot be sustained. Appeal allowed.

Summary

Issues:
Classification of goods under DEPB Schedule, Admissibility of DEPB credit, Interpretation of DGFT clarification.

Classification of goods under DEPB Schedule:
The case involved a dispute regarding the classification of goods under the DEPB Schedule. The appellant was accused by the department of wrongly availing DEPB benefits for exporting 'Surimi' under Sr.No.1 of group code no.66, while the appellant claimed entitlement under Sr.No.2. The appellant received a clarification from DGFT in their favor, stating that 'Surimi' falls under Sr.No.2/66 of the DEPB Rate Schedule. The tribunal analyzed the DGFT clarification and concluded that the appellant's product was correctly classified under Sr.No.2/66, as per the DGFT decision. The tribunal emphasized that the adjudicating authority cannot override the policy decision taken by DGFT, and hence, set aside the impugned order.

Admissibility of DEPB credit:
The appellant argued that the dispute over the classification of goods under the DEPB Schedule was resolved in their favor by the DGFT clarification. The appellant highlighted that the DGFT withdrew the show cause notice issued earlier, confirming their entitlement to DEPB on the export of 'Surimi' under Sr.No.2/66. On the contrary, the revenue contended that the decision to classify the appellant's product under Sr.No.1 by the DEPB Committee prevails over the DGFT clarification. The tribunal carefully examined the sequence of events, including the DGFT clarification and withdrawal of the show cause notice, and concluded that the clarification by DGFT holds precedence over the department's allegation. Consequently, the tribunal allowed the appeal, emphasizing the importance of the DGFT's decision in determining the admissibility of DEPB credit.

Interpretation of DGFT clarification:
The tribunal scrutinized the DGFT clarification, which affirmed the appellant's entitlement to DEPB on the export of 'Surimi' under Sr.No.2/66 of the DEPB Rate Schedule. The clarification highlighted that 'Surimi' is a fish product falling under Chapter 3 of the ITC (HS) Code and not a meat product. The tribunal emphasized that the DGFT's decision was crucial in resolving the dispute and ensuring the correct classification of the appellant's product for DEPB benefits. By relying on the DGFT clarification and subsequent withdrawal of the show cause notice, the tribunal concluded that the adjudicating authority erred in disregarding the DGFT's decision and upheld the appellant's entitlement to DEPB credit.