Tribunal Grants Appellant Benefits, Clarifies Customs vs. DGFT Powers on DEPB Credit

The Tribunal allowed the appeal, granting the appellant consequential benefits as per the law. The judgment clarified the division of powers between Customs and DGFT regarding DEPB credit, emphasizing Customs' verification role and DGFT's authority in credit matters. The Tribunal set aside the Customs duty demand, cancellation of DEPB registration, interest, and penalty, in line with a Division Bench ruling that Customs Authorities cannot modify DEPB credit, and only DGFT has the power to grant, modify, or recover credit.

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Issues:
1. Customs Authority's power to cancel DEPB registration for exported goods not covered under SION
2. Levying duty, interest, and penalty post cancellation of DEPB registration

Analysis:
Issue 1: Customs Authority's power to cancel DEPB registration
The appellant, a manufacturer of various goods, exported products under the DEPB scheme. Customs Authority canceled the DEPB registration citing non-admissibility of credit due to goods not being covered under Standard Input Output Norms (SION). The appellant utilized the DEPB credit for duty payment on imported goods. The Customs Authority issued Show Cause Notices and canceled the DEPB registration, demanding repayment of utilized credit. The Adjudicating Authority confirmed the duty demand but waived interest and penalty, considering the appellant's lack of fault during import. The Commissioner (Appeals) upheld the cancellation of DEPB Scrip but set aside interest and penalty.

Issue 2: Levying duty, interest, and penalty post cancellation of DEPB registration
The appellant argued relying on a Division Bench ruling that Customs Authorities cannot modify DEPB credit, and only DGFT has the power to grant, modify, or recover credit. The appellant contended that Customs should inform DGFT for recovery of excess credit. The Tribunal agreed, citing the Division Bench ruling, and set aside the Customs duty demand, cancellation of DEPB registration, interest, and penalty. The Tribunal held that Customs' role is to verify exports, and recovery of excess credit falls under DGFT's jurisdiction.

In conclusion, the Tribunal allowed the appeal, granting the appellant consequential benefits as per the law. The judgment clarifies the division of powers between Customs and DGFT regarding DEPB credit, emphasizing Customs' verification role and DGFT's authority in credit matters.

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