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TMI Blog2006 (5) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... hin the competency of the DGFT and the Customs authorities cannot commit an act of usurpation by appropriating those powers to themselves. Only in a case where the DGFT modifies the credit given on account of the malpractices of the appellant, the Customs can initiate further proceedings as per law. In these circumstances, in the present appeals, it was submitted that the DGFT had dropped the proceedings in all cases excepting in the case of M/s. Blue Water Foods and Exports Pvt. Ltd. Therefore, we have no other option but to allow all these appeals with consequential relief, if any. As regards the cases pending before the DGFT, any action taken by the Customs is rather premature. Summing up, we allow all these appeals without prejudice to the right of the Customs authorities to take appropriate action in respect of cases pending before DGFT. - HON'BLE DR. S.L. PEERAN, SHRI T.K. JAYARAMAN, JJ. For the Appellant : S/Shri K.S. Ravi Shankar, B.V. Kumar, N. Anand, B. Venugopal, Advocates and Bheemasena Rao, Consultant For the Respondent. S/Shri Ashok Haranahalli, Sr. Advocate, Man Mohan, Advocate K. Sambi Reddy, JDR Order T.K. Jayaraman, Member (T) 1. The issue involved in all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in these appeals. 2. The learned Advocates who appeared on behalf of the appellants urged the following points:- (i) The Customs authorities have no jurisdiction to demand Customs duty under Section 28 of the Act since none of the ingredients of the said provision were attracted in the present appeals and there was no non-levy/short levy or erroneous refund of duty to warrant a demand against the appellant. (ii) No excess credit was claimed by the appellants to warrant action by Customs who have no jurisdiction in the matter. (iii) The investigation was conducted by the DRI and they have issued the Show Cause Notices. The DRI has no jurisdiction to decide the rate at which DEPB credit was available to the appellant. Both the Commissioners who passed the impugned orders and the DRI have exceeded the jurisdiction in demand of Customs duty on the purported re-determination of DEPB credit. (iv) It is well settled that Customs authorities have no jurisdiction to determine the rates of DEPB, which can be claimed by a party who is an exporter. The following case laws were relied on : (a) 2004 (175) E.L.T. 611 (Tribunal) = 2004 (95) ECC 540 decided on 1-3-2004 (Bombay Bench) (b) 2005 (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (xii) The learned Advocate Shri K.S. Ravi Shankar cited quite a few case-laws to buttress his point that DEPB is goods or 'property' liable for sales tax. Therefore, it cannot be considered as duty and cannot be demanded under Section 28 of the Customs Act. The following case-laws were relied on - (a) Jindal Drugs Ltd. v. State of Maharashtra - 2004 (178) E.L.T. 105 (Bom.) wherein it is held that DEPB is goods or property liable for sales tax. (b) Philco Exports v. Sales Tax Officer and Others - 2001 (124) STC 503 (Del.) - DEPB is freely tradable. When there is no restriction on the purchase and sale of DEPB freely and it has a value unrelated to the goods, DEPB is merchandise. DEPB is by itself property and these goods are subject to tax. (xiii) When this issue was raised by the Customs, the DGFT, on 11-11-1988, issued Public Notice No. 55 (RE98)/1997-2002 requiring the Marine exporters exporting the products falling under Sl. No. 2 to furnish a declaration in the Shipping Bill of the usage of chemicals and preservatives in the said export product. But, the said requirement of making the said declaration for SI. No. 2 has been dropped in the Export-Import Policy 2002-03 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation No. 34/97 dated 7-4-1997. Hence, the question of violation of the said Notification does not arise. In the impugned Show Cause Notices, the details of the DEPB licences and its utilization have not been mentioned. The department has not furnished the details of the Bills of Entry under which the beneficiaries have utilized the DEPB licences or the details of imports made by them. Further, no evidence has been placed on record to show the alleged loss of duty. In the absence of such information, the loss of revenue on that count cannot be assumed or presumed. (xvi) All the DEPB licences have been transferred to third parties and no imports were made by them availing duty exemption utilizing the said DEPB licences. The right to avail duty exemption benefits under the said DEPB licences has been transferred to third parties who are ultimately entitled to utilise the duty exemption while effecting imports. At the point of import of the goods by the transferees and payment of duty based on available credit under each DEPB licence, they were valid DEPB licences and the imports were legitimately made. Any subsequent action to recover duty in respect of the said licences is not in ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch circumstances, the Department has no jurisdiction to demand the alleged excess DEPB credit granted to the appellants by the JDGFT. Further, the Customs Act, 1962 does not empower the Commissioner or for that matter, any Officer of Customs to grant, modify or revoke an entitlement (Import Licences, Advance licences, DFRC, DEPB, EPCG, etc.) granted by the Licensing Authorities (DGFT/JDGFT) under the provisions of the Foreign Trade (Development Regulation) Act, 1992 or the EXIM Policy notified from time to time. The proposal to reduce the entitlement of DEPB from 5% to 2% is the prerogative of the JDGFT only and not the Customs. 3. The learned Senior Advocate for the respondents urged the following points: - (i) The DEPB Scheme works like this : - The exporter exports the product under a special Shipping Bill prescribed for the DEPB Scheme. - After the export is made, on the basis of the Shipping Bill, they apply to the DGFT for grant of DEPB credit/Licence. - The DGFT grants the credit based on the details of exports in the Shipping Bill. - The credit is made use for payment of import duty. All the above steps constitute part of a single process of assessment of duty. For claiming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he exporters collapses. The export of the product under the DEPB Scheme, the issue of Pass Book, the availing of credit at the time of import constitute one comprehensive scheme. The exporter cannot escape from the liability of payment of duty as he has availed the benefit of duty credit by submitting false declaration. (vi) The decision of Gujarat High Court, in the case of Suresh Dhansiram Agarwal v. UOI - 2005 (183) E.L.T. 424 (Guj.) = 2002 (53) RLT 25 is relevant. In the said case, the Tribunal had found that the assessee therein cannot be fastened with the liability to pay the duty as they cannot be considered as importers. While referring to the said contention, the High Court observed as under: We are not in a position to agree with CEGAT as regards the said finding that the four firms cannot be said to be the importer. (vii) Circular 45/2003, dt. 4-6-2003 states as under : - All DEPB scrips pending registration/verification against exporters covered (ii) above, should be completed immediately including finalization of exports allowed on provisional basis earlier. (viii) In the DEPB Scheme, DEPB credit is given only after export is made. The question whether the export has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant cases. Sl. No. 2 of the DEPB schedule reads as follows:- Processed, preserved and frozen fish and crustaceans, mollusks and other aquatic invertebrates (excluding those covered under Sl. No. 1) 5. It is not the case of the Revenue that the appellants have not shipped processed and frozen fish etc. as given in Sl. No. 2. The only quarrel is about the term preserved . These goods were generally exported to European countries and Japan. It is also a fact that these are all marine products. To put it differently, they are all of animal origin and are supposed to be consumed by human beings. Even for layman, it is unthinkable that they are not preserved. But for preservation, the items would have deteriorated and would have become unfit for human consumption. The method of preservation may be different. Even, the Ministry of Commerce and the DGFT who are the Policy makers were not very clear on the issue. When the Customs Department and DRI investigated the matter and found that no preservatives and chemicals mentioned in the SION have been used, they initiated action against all the appellants and informed the DGFT also. It is seen that the DGFT authorities are having powers under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods which are in conformity with the description given in the DEPB rate schedule, (emphasis supplied) 6. From the above, it is seen that the DGFT is of the view that the main point is to check up and confirm that the applicant had exported goods, which are in conformity with the description given in the DEPB rate schedule. In the present cases, we cannot say that the appellants exported some other product other than what is mentioned in Sl. No. 2. The point of contention is only with regard to the use of the preservatives mentioned in SION. The JDGFT himself has said in the above mentioned order that the DEPB Scheme has not put any condition that the exporter should produce evidence for having used chemicals/preservatives in the proportion given in the SION. 7. In view of the above, we understand that the DEPB rate is fixed not only on account of the use of the inputs mentioned in SION but also on account of value addition. The Government of India has also not issued any instructions to strictly verify whether inputs have been used in the proportion indicated in the SION. When this issue was raised by the Customs, a meeting was held by the DGFT in Cochin. The learned Advocates have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of fresh export consignments. 3. Marine Products Export Development Authority (MPEDA) and Seafood Exporters Association of India (SEAI) represented to Board that as a result of investigation by DGRI/Customs, export of fish and fish products had suffered and many genuine exporters were facing difficulties in meeting their export schedule. Further, the delay in registration of DEPB scrips was causing delay in clearance of import consignments. 4. The issue was discussed in the full Board meeting and vide this Office letter of even number dated 6-9-2002 it was conveyed that verification/registration of DEPB scrips may be withheld only in respect of those cases where investigations are going on or are contemplated; all other cases should be finalized and DEPB scrips verified/registered. Later on, MPEDA, SEAI and DGFT requested for early final decision in the matter. This issue was, therefore, discussed with DGRI, DGFT and Associations in details. In this regard, investigations conducted so far by DGRI/Customs has revealed two types of situations. Whereas in some cases DRI/Customs has completed investigations and issued show cause notices on the basis of their findings, in other cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the DGFT. As regards the examination of the goods to be exported, the Customs have all jurisdictions and nobody has questioned that part of the jurisdiction of the Customs. If the Customs authorities are of the view that the description given in the shipping bill does not conform to what is found during examination, it is for them to inform the DGFT and later it is for the DGFT to take appropriate action. In the present cases, although the Customs have permitted the exports of the impugned products, a doubt arose as to the proper use of preservatives/chemicals as per SION. The DRI conducted investigations and issued Show Cause Notices. The Show Cause Notices were sent to the DGFT authorities for taking appropriate action under Foreign Trade (Development and Regulation) Act. The DGFT, after giving an opportunity of personal hearing to the appellants, have passed orders dropping the cases. In other words, DGFT have decided not to reduce the credit given to the appellants. In these circumstances, while deciding these appeals, we have necessarily to take into account the fact of DGFT dropping the cases against the appellants. Once the cases against them are dropped by the Competent Au ..... X X X X Extracts X X X X X X X X Extracts X X X X
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