Supreme Court upholds Revenue's order on DEPB scheme eligibility

The Supreme Court upheld the Commissioner's order, ruling in favor of the Revenue and confirming the demand for Bills of Entry Nos. 930 and 2440. The Court determined that the goods covered under the DEPB scheme did not qualify for benefits under Notification No. 94/96-Cus. The appeal was allowed with costs, setting aside the Tribunal's order.

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Issues Involved:
1. Applicability of Notification No. 158/95-Cus.
2. Applicability of Notification No. 94/96-Cus.
3. Change of option between two notifications.
4. Compliance with conditions of the notifications.
5. Distinction between DEEC and DEPB Schemes.

Issue-wise Detailed Analysis:

1. Applicability of Notification No. 158/95-Cus.:
The goods were initially exported by the respondent-assessee and re-imported back to India after being rejected by the foreign buyer. The assessee claimed the benefit of Notification No. 158/95-Cus., which exempts re-imported goods from customs duty provided they are re-exported within six months. The assessee executed bonds for re-export but failed to re-export the goods due to recessionary conditions in the textile industry. Consequently, the Revenue issued show cause notices for realizing the amounts guaranteed under the bonds.

2. Applicability of Notification No. 94/96-Cus.:
The assessee argued that since it could not re-export the goods, it should be allowed the benefits of Notification No. 94/96-Cus., which was in force at the time of the original clearance from the factory. The adjudicating authority granted the benefit of Notification No. 94/96-Cus. for Bill of Entry No. 2256, as the goods were re-exported under the Duty Exemption Entitlement Scheme (DEEC), but denied it for Bills of Entry Nos. 930 and 2440, as the goods were covered under the Duty Entitlement Passbook Scheme (DEPB).

3. Change of Option Between Two Notifications:
The main contention of the assessee was that it could avail benefits under either of the two notifications if both were applicable. The Revenue countered that the assessee could not change its option after having initially claimed benefits under Notification No. 158/95-Cus. The Supreme Court found no substance in the assessee's submission, stating that the assessee must comply with the conditions of the initially chosen notification and cannot approbate and reprobate.

4. Compliance with Conditions of the Notifications:
The Supreme Court emphasized that having availed the benefit of Notification No. 158/95-Cus., the assessee must comply with its conditions. The Court cited the case of Tractors and Farm Equipment Ltd. v. Collector of Customs, Madras, to reinforce that the assessee cannot turn around and claim benefits under a different notification without fulfilling the conditions of the initially chosen one.

5. Distinction Between DEEC and DEPB Schemes:
The Supreme Court clarified that Notification No. 94/96-Cus. applies to goods exported under the DEEC or EPCG schemes, not the DEPB scheme. The adjudicating authority correctly granted the benefit of Notification No. 94/96-Cus. for the goods exported under the DEEC scheme but denied it for those under the DEPB scheme. The Court explained the differences between the DEEC and DEPB schemes, highlighting that DEEC involves duty-free import of raw materials for manufacturing export products, while DEPB allows exporters to use scrips for customs duty payments.

Conclusion:
The Supreme Court set aside the Tribunal's order and restored the Commissioner's order, confirming the demand for Bills of Entry Nos. 930 and 2440, as the goods were under the DEPB scheme and did not qualify for benefits under Notification No. 94/96-Cus. The appeal was allowed with costs.

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