DEPB credit verification limits customs cannot reduce DGFT-sanctioned credit and must refer discrepancies back for decision.

Customs authorities were confined to verifying the description, quantity and FOB value of export goods under the DEPB scheme, and could not unilaterally alter the credit rate sanctioned by the DGFT. Where the shipping bill and export declaration matched the goods but a discrepancy appeared between the declared DEPB item and the rate applied by the DGFT, Customs was required to refer the matter to the DGFT for further decision. The DGFT's interpretation and sanction under the Import and Export Policy bound Customs, so the credit could not be reduced by Customs on its own.

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Issues: Whether Customs authorities could reduce the DEPB credit sanctioned by the DGFT on the basis of a mismatch between the exporter's declaration to Customs and the DEPB rate applied by the DGFT, and what course should be followed when such discrepancy is noticed.

Analysis: The exporter had complied with the Customs procedure and declared the relevant DEPB item in the prescribed declaration. The Customs authorities verified the goods and found that the description in the shipping bill tallied with the export goods, but noticed that the DEPB rate sanctioned by the DGFT did not match the item number declared to Customs. The role of Customs under the scheme was confined to verification of the description, quantity and FOB value of the export goods. The sanction of the credit rate was within the domain of the DGFT, whose interpretation and decision under the Import and Export Policy was binding on Customs. If Customs found a discrepancy, the proper course was to bring it to the notice of the DGFT and await further orders, not to unilaterally alter the credit.

Conclusion: The Customs authorities had no power to reduce the DEPB credit from 4% to 2%; the matter was required to be referred to the DGFT for a fresh decision.

Ratio Decidendi: Customs cannot sit in judgment over the DGFT's sanction of DEPB credit and must confine themselves to verification and reference of discrepancies to the DGFT for appropriate action.

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