2005 (12) TMI 570 - HC - Income Tax

Summary

Issues Involved:
1. Return of original DEPB licenses with verification reports.
2. Jurisdiction of Customs authorities to verify classification and rate of credit for DEPB licenses.
3. Withholding of DEPB licenses by Customs authorities.
4. Extension of validity period of DEPB licenses.
5. Challenge to Orders-in-Original issued by Deputy Commissioner of Customs.

Detailed Analysis:

1. Return of Original DEPB Licenses with Verification Reports:
The petitioners sought a writ of mandamus directing respondents to return the original DEPB licenses with verification reports as per para 7.43 of the Handbook of Procedure (Volume I) 1997-2002. The petitioners argued that despite several requests, the Customs authorities failed to return the DEPBs after verification, which is essential for utilizing the DEPB credit.

2. Jurisdiction of Customs Authorities to Verify Classification and Rate of Credit for DEPB Licenses:
The petitioners contended that the Customs authorities have no jurisdiction to verify the classification of exported goods and the rate of credit decided by the DGFT authorities for the DEPB licenses. The role of the Customs officers is limited to verifying the details of the exports as given on the DEPB to ascertain if they match their records. The Customs authorities are not justified in withholding the DEPB licenses by raising issues beyond their jurisdiction.

3. Withholding of DEPB Licenses by Customs Authorities:
The petitioners presented 30 shipping bills for export under the DEPB scheme, and DEPB credits were issued by the Joint Director General of Foreign Trade based on these shipping bills. Despite this, the Customs authorities withheld the DEPB licenses without assigning any reasons. The Customs authorities argued that the goods exported by the petitioners were not properly classified under the DEPB and thus not entitled to DEPB credit. However, the court held that once the licensing authority issues the DEPB license, it is not open to the Customs authorities to question the validity of the DEPB credit granted. The Customs authorities' action of questioning the entitlement of the petitioners to credit under the DEPB license issued by the licensing authority was deemed beyond their authority and without jurisdiction.

4. Extension of Validity Period of DEPB Licenses:
The petitioners requested an extension of the validity period of the DEPB licenses, as they had moved an application seeking a direction for endorsement and return of the DEPB licenses and an extension of their validity. The court noted that despite a specific direction permitting the petitioners to avail of the total credit subject to furnishing a bank guarantee, the petitioners did not comply. Consequently, the request for an extension of the validity period was not granted.

5. Challenge to Orders-in-Original Issued by Deputy Commissioner of Customs:
The petitioners challenged the Orders-in-Original passed by the Deputy Commissioner of Customs, which denied DEPB benefits on the grounds that the goods exported did not fall under the claimed serial numbers and no DEPB rate was prescribed for them. The court held that the role of the Customs authorities is limited to verifying the details of export as given on the DEPB licenses and not questioning the eligibility of the petitioners for the grant of such licenses. The impugned Orders-in-Original were quashed and set aside.

Conclusion:
The petition was allowed, and the action of the Customs authorities in withholding the DEPB licenses on the grounds that the export products are not covered under the DEPB scheme was held to be without jurisdiction and authority of law. The court directed the release of bank guarantees furnished by the petitioners and made the rule absolute with no order as to costs. The civil applications seeking early hearing of the main petition were disposed of as the main petitions were adjudicated.