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TMI Blog1996 (12) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... EEC book of the writ petitioner. Unless the Customs Authorities make such endorsement the writ petitioner cannot apply for transfer of the import licence for import of duty free goods to which the writ petitioner became entitled by reason of such export. It is the petitioner's case that the customs authorities were duty bound to make the endorsement of the export and they had no jurisdiction to question the valuation of the goods. 3.In this background of facts the writ application was moved by the writ petitioner on 24th March, 1995 inter alia for a direction on the customs authorities to record and certify the exports effected by the petitioner in the DEEC book of export Part II and to return the same to the petitioner. Interim relief was also prayed for in the same terms. By an order dated 24th March, 1995 the learned Single Judge directed the Customs Authorities to make the endorsement as prayed for by the writ petitioner and to return the DEEC Book after such endorsement to the petitioner within 12 days. Within the same period the respondents were also directed to extend the validity period of the writ petitioner's licence by a period of six months. The learned Judge was of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent was aggrieved with the finding of the Customs Commissioner. Liberty was given to the writ petitioner respondent to file a supplementary affidavit annexing the order of adjudication as well as setting out grounds of challenge to the order of the Commissioner of Customs as he might be advised. A supplementary affidavit was accordingly filed by the writ petitioner respondent challenging the order of the Commissioner. 6.When the hearing was resumed, it was conceded by the Customs Authorities that the order of the Commissioner could not be sustained and that it should be set aside and remanded back for re-adjudication after observing the principles of natural justice and in accordance with law. The learned Counsel for the writ petitioner respondent however submitted that he was willing to challenge the impugned order of the Commissioner by way of a departmental appeal and that the proceedings before this Court should be accordingly disposed of without disturbing the interim order dated 24th March, 1995. 7.Both the Customs Authorities as well as the Union of India however resisted this submission and contended that the Court should itself determine the jurisdiction of the Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefits flowing from the orders under appeal. We are unable to accept the submission of the writ petitioner. 10.To appreciate the scope of the powers of the Customs Authorities it is necessary to consider the origin, nature and scope of the DEEC scheme. The DEEC or the Duty Exemption Entitlement Certificate scheme is a part of the package of incentives formulated by the Central Government for boosting exports. Briefly stated if envisages the grant of import licences to exporters for import of those materials duty free which were required for manufacture of the goods exported.The sale of such import licence or the materials imported duty free in the Indian market are other benefits to attract exporters to increase their exports. Another such beneficial measure for exporters is the total exemption from income tax on the export profits granted under Section 80HHC of the Income Tax Act, 1961. 11.The DEEC scheme in so far as it relates to exemption of import duty has its origin in the Act. Under Section 12 of the Act duty of customs are leviable on all goods imported into or exported from India except as otherwise provided in the Act itself or in any other law for the time being in for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e actual imports and exports are also required to be certified by a Chartered Accountant. Upon discharge of the prescribed export obligation and realisation of the sale proceeds the exporter is at liberty under Part I to apply for transfer of the licence and the DEEC to the licensing authority. 13.The requirement in Column 10 of Part II-F of the notification for the Customs Authorities to sign the declaration of value would appear to indicate that the Customs Authority would have to ascertain the correct value of the exports. If the Customs Authorities were merely to act as a rubber stamp on the value declared by the exporter there would have been no necessity for the customs authorities to separately make an endorsement in the DEEC. It must also be remembered that it is on the basis of the value that the exporter becomes entitled to import duty free materials. 14.This inference is supported by the provisions of the Duty Exemption Scheme itself. The scheme forms part of the Export and Import Policy for the period 1992-97 formulated in exercise of the powers under Section 3 of the Imports and Exports (Control) Act, 1947. The Imports and Exports (Control) Act has been replaced by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Section 2(41) as follows : "(41) "value", in relation to any goods, means the value thereof determined in accordance with the provisions of sub-section (1) of Section 14". Section 14(1) of the Act therefore merely lays down a method for the determination of the value of goods and does not limit the jurisdiction of the customs authorities to determine the value of [goods] only to cases of assessment of duty. 19.In fact Section 14 is utilised for determination of value under several other enactments where duty is not assessable at all. For example, under the Export Control Order, 1988 Clause 2-h also defines value as having the same meaning as in Section 14(1) of the Act. Clause 3(3) of the order also provides that if the value of the goods has been incorrectly declared by the exporter then the export of such goods is prohibited. The export of prohibited goods is impermissible under Section 11 of the Act. It is the customs authorities which will have to determine the question of value under Section 14(1) for the purpose of prohibiting the export of goods in question. This is independent of any question of assessability of the goods exported to duty. 20.Similarly, under the Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he customs authorities, the writ petitioner had inflated the value of the Jet Nozzles 84 times so that the profit earned was 8,429 per cent. It is not unreasonable in the circumstances for the customs authorities to hold an enquiry into the proper value after an appropriate enquiry. This determination would be essential particularly in the case of value based license as exemption of duty would be granted on the goods imported corresponding to the export value. To compel the Customs Authority to make the endorsement on the DEEC certificate would be to deny the customs authorities' right and indeed their obligation to question the value of the exports made - an obligation which is not discharged only because the foreign exchange had been received on the invoiced amount. In fact the receipt of foreign exchange might in reality be a mirage. Apart from the public revenue being defrauded of large amounts of money both on account of income tax and on account of import duty by a false declaration of value of exports by the exporter, no benefit would accrue to the national exchequer at all as the foreign exchange earned would be used to purchase the duty free imported material. 24.To sum u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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