2008 (1) TMI 189 - AT - Customs

Tribunal Upholds DEPB Benefit at 20% Without Value Cap, Prioritizing Indian Law Over WTO

The Tribunal upheld the lower appellate authority's decision, allowing the respondents to claim DEPB benefit at a rate of 20% without the Value Cap, ... DEPB benefit can’t be denied for the fact that product specified in the DEPB schedule is only Polypropylene Mats whereas the respondents have exported Fragrant PP Mats - Since the fragrant PP Mats are only a sub-class of the PP Mats, its coverage under the same cannot be denied - relevant shipping bills contain a clear declaration regarding the brand as required under the Exim Policy. Hence, the Value Cap as sought to be applied by the Department has no basis - entitled to DEPB benefit @ 20% Issues:1. Denial of DEPB benefit in respect of 13 impugned shipping bills.2. Interpretation of DEPB Scheme regarding specified export products.3. Value Cap applicability in DEPB benefit.4. Validity of declared value for grant of DEPB credit.5. Authority of DGFT officials in issuing DEPB scrips.6. Compatibility of DEPB Scheme with WTO provisions.Analysis:1. The case involved a dispute over the denial of DEPB benefit for 13 shipping bills. The original authority denied the benefit, but the lower appellate authority allowed it, leading to the Department appealing against the lower appellate authority's decision.2. The DEPB Scheme allows credit against specified export products. The Department argued that the exported Fragrant Polypropylene Mats did not match the specified product in the DEPB schedule, Polypropylene Mats, thus disqualifying the respondents from DEPB benefit.3. The Value Cap provision in the DEPB Scheme was contested. The Department claimed that the respondents were not entitled to DEPB benefit exceeding the Value Cap, which the respondents argued against, stating their product was branded and exempt from the Value Cap.4. The declared value of the impugned goods was challenged as inflated, impacting the grant of DEPB credit. The validity of the declared value vis-a-vis the PMV was a crucial aspect in determining the DEPB benefit eligibility.5. The authority of DGFT officials in issuing DEPB scrips was raised. The respondents argued that since the DGFT officials had already considered and approved their DEPB benefit claim, the Customs authorities could not question or override that decision.6. The judgment delved into the compatibility of the DEPB Scheme with WTO provisions. While acknowledging the Scheme's incompatibility with WTO rules on subsidies, the Tribunal found that under Indian laws, the higher DEPB benefit could not be denied solely on that ground, leading to the rejection of the Department's appeal.In conclusion, the Tribunal upheld the lower appellate authority's decision, allowing the respondents to claim DEPB benefit at the rate of 20% without the application of the Value Cap, emphasizing the existing law's precedence over WTO provisions in this context.