ORDER
T.K. Jayaraman, Member (T)
1. This appeal has been filed against the OIA No. 58/2003-Cus., dated 16-9-2003 passed by the Commissioner of Customs Appeals), Bangalore.
2. The appellants exported Marine products described as “Frozen cuttlefish/Frozen ribbonfish/Frozen squid/Frozen pud shrimps, etc.” under the DEPB Scheme. The DEPB credit rate is 4% as allowed in the DEPB Pass Book by the Licensing Authority, The Customs Authorities denied DEPB credit at 4% corresponding to SI No. D2 in the relevant schedule on the ground that the exporter/appellant has not given a declaration in the Shipping Bill to the effect that preservatives and chemicals prescribed in Standard Input Output” Norms relating to Fish and Marine products have been used in the export product. The credit was restricted to 2%. The appellants approached the Commissioner (Appeals). The Commissioner (Appeals) held that the classification under the DEPB schedule is also the function of the Customs Authorities. Therefore, he upheld the decision of the original authority. The appellants strongly challenge the impugned order of the Commissioner (Appeals).
3. Shri ML Grover, the learned Advocate appeared on behalf of the Appellants and Shri K. Sambi Reddy, the learned JDR for the Revenue.
4. The learned Advocate urged the following points:
(i) The DEPB Credit is specified by the DGFT by a Public Notice. At the time of export, the Customs examined not only the documents but also the goods exported and only after appraisement of the Shipping Bills under Section 50/51 of the Customs Act, exports were allowed. The appellants submitted all documents to the Licencing Authority for issuing DEPB licence at the appropriate credit rates on the basis of their exports and the licensing authority, after scrutiny of the documents, satisfied himself as to the entitlement of credit under SI. No. D2 at 4% of FOB value. In these circumstances, the original authority cannot curtail the credit to 2%.
(ii) CBEC Circular No. 15/97-Cus., dated 3-6-1997 clarifies the role of the Customs Authorities in the following manner.
This matter has been re-examined, it has been decided that the role of Custom Authorities should be confined to verification of correctness of export declaration regarding description, quantity and FOB value of the export product. It will be for the Licensing Authorities granting credit to ensure that the credit is permitted by them at the correct rate as notified by the DGFT.
(iii) After the issue of DEPB by the Licensing Authority, Customs Authorities are only required to verify the details of the exports as given in the DEPB with reference to their records and no dispute or determination of classification is involved.
(iv) The Commissioner (Appeals) has misinterpreted the Policy provisions as well as the Board’s Circular.
(v) Reliance is placed on the case-law in M/s. M.K. Fisheries v. CC, Cochin 1995 (35) RLT 280 (CEGAT) wherein it has been held that the Customs Authorities have no legal power to reduce the DEPB rates, which are exclusively within the domain the of the Licensing Authority. Reliance was further placed on a decision of this Bench in the case of TTK Prestige Ltd. v. CC, Bangalore holding that the DGFT authorities, and not the Customs Authorities, have jurisdiction to reduce the excess credit taken.
(vi) Our attention was also invited to the decision of the Gujarat High Court in the Party’s own case Civil Application No. 8436/2001, dated 20-9-2001, which passed an interim order directing the authorities to allow the credit claimed by the party regardless of the fact of expiry of DEPB licence, subject to furnishing Bank Guarantee for the balance credit which was given to the applicants after expiry of licence. It was pointed out that the decision of the lower authorities to dis-allow the credit is contrary to the decision of the High Court.
5. The learned JDR pointed out that the Gujarat High Court has given only an interim order and has not examined the issue on merits. He said that the appellants are required to give a declaration as to the use of preservatives and chemicals. Since they had not given the said declaration, the lower authority has rightly restricted the credit to 2%. Further, the JDR invited our attention to the Export and Import Policy and Handbook of Procedures 1997-2002 wherein in para 7.43, it has been stated that the “The licensing authority shall ensure that while issuing the DEPB, the Shipping Bill no(s) and date(s), FOB value in Indian rupees as per Shipping Bill(s) and description of export product are endorsed on the DEPB. Before allowing the imports against DEPB, the Customs shall verify that the details of the exports, as given on the DEPB, are as per their records.”
6. We have gone through the records of the case carefully. It has been clarified by the Board that the role of the Customs Authorities should be confined to verification of correctness of exporter’s declaration regarding description, quantity and FOB value of the export product. It will be for the Licensing Authorities granting credit to ensure that credit is permitted by them at the correct rate as notified by the DGFT. This point has been upheld in a plethora of decisions of the Tribunals. Two of the decisions have already been cited. In such circumstances, the Customs Authorities can only report to the DGFT when there is discrepancy between the goods declared and those exported. To put it in different words, the Customs authorities have no powers to reduce the rate from 4% to 2%, In the result, we allow the appeal with consequential relief, if any, by setting aside the impugned order.
(Pronounced in open Court on 26-4-2006)