DEPB- Error in classifiation

[Guest]

Dear Sir,

We had made export under DEPB in the year 2008 to 2011 and got the DEPB license from DGFT .

In between during export It came to notice of Customs Authority that in some product there is

error in DEPB classification , although DEPB rate is same ,for which licenses are already taken

. At the time of registration of the said license department has raised this query and hold the

DEPB license for registration and issue redemption certificate. Department is planning to issue SCN, but the said license is expired under customs custody and till dated department is not issued any SCN.

Now query is that:-

1- Can any export benefits be denied due to technical error ?

2- what are remedies available with us to avail this benefits.

If possible please mentioned related case law and rules and section also.

Regards

[YAGAY andSUN]

Dear Rahul,

Please confirm that when the Customs Department had hold the query, what was your reply and when the redemption certification was issued by the Department, whether, you had approached to the RA/DGFT's office.You have stated above that Department had not issued any SCN as yet. Please check with the Department that why there is hitch in issuing the SCN?

Further, please provide us the exact date on which the department had raised the query and date of reply duly submitted by you. After going the relevant facts, we will certainly help you out in this matter.

Regards,

YAGAY and SUN

(Management and Indirect Tax Consultants)

[YAGAY andSUN]

Dear Rahul,

We were expecting replies to our queries for supporting you in this matter but could not get for some or other reasons, Anyhow, in continuation to our earlier reply, we are submitting relevant judgments for your kind perusal and necessary actions, namely:-

1. It was held in the matter of Khanna Peper Mills v. CC (2011) 273 ELT 149 (CESTAT) = 2011 (4) TMI 1192 - CESTAT, DELHI, that Department cannot say that DEPB authorization issued by DGFT is invalid, without referring the matter to DGFT.
2. Validity of license is to be decided by DGFT and not by Customs Department. Until license is cancelled by licensing authority, it is deemed to be valid - CC v. Jupiter Exports (2007) 213 ELT 641 (Bombay HC DB).= 2007 (6) TMI 2 - HIGH COURT, BOMBAY
3. Customs Authorities cannot issue show cause notice on basis that license issued is against import policy - A V Industries v UOI 2005 (187) ELT 9 (Bom HC).= 2005 (5) TMI 359 - BOMBAY HIGH COURT
4. License issued by DGFT cannot be questioned by customs unless it is strictly permitted by the words of notification - Naveen Kumar Didwala v CC 2011 (138) ELT 1258 (CEGAT).
5. DEPB License issued by DGFT cannot be challenged by customs - Pradip Polyfils v UOI 2004 (173) ELT 3 (Bom HC DB). = 2004 (1) TMI 93 - BOMBAY HIGH COURT

You should approach immediately to the Commissioner of Customs as well as DGFT in this matter on the strength of above mentioned judgments and seek justice.

Regards

YAGAY and SUN

(Management and Indirect Tax Consultants)

AI Summary

Validity of DEPB licences: customs cannot invalidate DGFT-issued licences; challenge and cancellation lie with the licensing authority. Customs detained DEPB licences over alleged classification errors and proposed show cause notices, but the validity and cancellation of DEPB licences are within the exclusive remit of DGFT; Customs cannot treat DGFT-issued licences as invalid or initiate proceedings challenging them except as strictly permitted by notification, and licence validity is presumed until DGFT cancels it. The advised remedy is to approach the Commissioner of Customs and DGFT with relevant factual records and rely on precedents establishing DGFT primacy.