TaxTMI 
TaxTMI 
2020 (2) TMI 234
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....n Trade which gives incentive to the exporters by way of credit (DEPB credit) as a percentage of the value of exports which can be used towards payment of import duty on any products. For the purpose of DEPB credit a separate schedule is prepared by the DGFT which is not based on HSN or the customs tariff. 4. The respondents were investigated by the DRI officers as it was felt they were misclassifying their export products under the DEPB schedule with the intention of claiming higher DEPB credit. The officers visited various premises of the respondent, obtained relevant records and registers and after scrutiny came to the conclusion that the respondent had misdeclared the export goods in their shipping bills as "cast iron or castings (machined) (for cylinder liners)" whereas the same should have been correctly classified as "cylinder liners/cylinders/top cap sleeves (admittive cost products/identifiable ready to use machine parts of iron)" falling under serial no 65/531 of engineering products (61) of the DEPB credit schedule. It also appeared to the officers that the DEPB credit must be appropriately reduced and the exported goods were liable for confiscation under Section 113(....
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....ct, namely cylinder liners, whereas the exported goods were two different products namely cylinder liners and top cap sleeves. Therefore, the First Appellate Authority has erred in taking the letter of the DGFT to be a letter clarifying the classification of the products under DEPB schedule. ii) Further, the EXIM Policy changes every year and the clarification pertains to 7 years prior to the year of export. Therefore, same does not apply to the present case. The Commissioner (Appeals), has not examined the clarification issued by the DGFT and its applicability to the DEPB scheme properly. Clarification by DGFT pertains to advance licence and Duty Free replenishment scheme to which standard input output norms (SION) apply. SION do not apply to the DEPB scheme. In the case of advance licence/ DFRC scheme the exporter is allowed import of raw material duty free as per the SION during imports and exports. However, in case of DEPB scheme, the exporter is allowed credit of an amount as a percentage of exports value as per the DEPB schedule. The DEPB schedule has no co-relation with any of the inputs. The credit which is received under the DEPB scheme can be used towards payment of cu....
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....e buyer giving the correct description to the buyer shows their intent. He would submit that the impugned order is completely silent on this aspect. The Commissioner (Appeals) has wrongly relied on the letter of the DGFT which has nothing whatsoever to do with the DEPB credit. He therefore prays that the impugned order may be set aside and the order of the lower authority may be upheld. 7. Pre contra Learned Counsel for the respondent supports the impugned order. 8. We have considered the arguments on both sides and perused the records. It is not in doubt that the goods were declared in a particular manner in the export documents and that they were cleared by the department officers after assessment and examination. As per the description given in the documents, the DEPB schedule under which they claimed credit matched. There is nothing on record to show that the duplicate set of invoices which they prepared for the overseas importers were presented before the customs officers. Only subsequent investigations by the DRI resulted in unearthing of the documents including the duplicate set of invoices. We find that First Appellate Authority has not considered this aspect or given....
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.... not provide for such confiscation. As the penalty under Section 114 is dependent upon the goods being held liable for confiscation under Section 113 this penalty also does not sustain. Since the goods cannot be confiscated under Section 113, the question of the order imposing a redemption fine under Section 125 also does not arise. Section 125 reads as follows: 125. Option to pay fine in lieu of confiscation.- (1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods 1[or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit: Provided that, without prejudice to the provisions of the proviso to sub-section (2) of section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon. (2) Where any ....