2012 (11) TMI 208 - HC - Customs

Rubber Mats Excluded from DEPB Scheme Benefits

COMMISSIONER OF CUSTOMS, COCHIN Versus GEORGEKUTTY NV.

COMMISSIONER OF CUSTOMS, COCHIN Versus GEORGEKUTTY NV. - 2012 (282) E.L.T. 498 (Ker.) Issues Involved:1. Eligibility of door mats, floor mats, etc., for the Duty Entitlement Pass Book (DEPB) Scheme.2. Legality of the clarification issued by the Director General of Foreign Trade (DGFT) without a public notice.3. Requirement of an amendment to the DEPB entry by a public notice.Detailed Analysis:1. Eligibility of Door Mats, Floor Mats, etc., for the DEPB Scheme:The petitioners, exporters of door mats and floor mats made from 'Rubber Compounded Sheets,' claimed benefits under the DEPB Scheme. The DEPB Scheme, as outlined in the EXIM Policy, aims to neutralize the incidence of basic customs duty on the import content of export products by granting duty credit against the export product. The credit is calculated based on Standard Input Output Norms (SION) and the value addition achieved by export. The relevant DEPB entry, No. 547, covers 'Rubber Compounded Sheets/Rings.' The petitioners argued that their products fell under this category and were eligible for DEPB benefits.The respondents contended that door mats and floor mats are distinct products with separate commercial identities and utilities, not covered under 'Rubber Compounded Sheets.' They argued that these products involve further processing beyond the stage of sheets, thus ineligible for DEPB benefits under Entry 547. The court examined the manufacturing process and concluded that door mats and floor mats are further value-added products, distinct from rubber compounded sheets. The court noted that other products made from rubber compounded sheets, like tyres, are separately listed in the EXIM Policy, indicating that it was never the policy makers' intention to include floor mats and door mats under Entry 547.2. Legality of the Clarification Issued by DGFT Without a Public Notice:The petitioners challenged the DGFT's clarification (Ext. P10) that excluded door mats and floor mats from DEPB benefits under Entry 547, arguing that such a clarification required a public notice. The respondents maintained that Ext. P10 was merely a clarification interpreting the existing EXIM Policy, not an amendment necessitating a public notice. The court referred to para 4.11 of the EXIM Policy, which requires a public notice for specifying or amending procedures, and para 4.13, which grants the DGFT the power to interpret the policy without mandating a public notice. The court concluded that the DGFT's clarification did not modify the existing policy but merely interpreted it, and thus did not require a public notice.3. Requirement of an Amendment to the DEPB Entry by a Public Notice:The petitioners argued that any exclusion of door mats and floor mats from DEPB benefits under Entry 547 required an amendment to the entry via a public notice. The court examined whether door mats and floor mats fell within the scope of 'Rubber Compounded Sheets' in Entry 547. The court found that these products are distinct from rubber compounded sheets and involve further processing. Therefore, excluding these products from DEPB benefits did not necessitate an amendment to Entry 547 by a public notice. The court emphasized that the DEPB benefits are product-specific, and products not explicitly listed in the EXIM Policy cannot be assumed to be included.Conclusion:The court set aside the judgment under appeal, allowed the writ appeals, and dismissed the original petitions and writ petitions. It held that door mats and floor mats are not covered under the DEPB Scheme as 'Rubber Compounded Sheets' and that the DGFT's clarification did not require a public notice. The court affirmed that only products explicitly listed in the EXIM Policy are eligible for DEPB benefits.