TMI Blog2009 (12) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Customs and Central Excise, Kanpur in the High Court. Held that- it is find from the scheme of the Customs Act, 1962 and the Foreign Trade (Development and Regulation) Act, 1992 that whenever a dispute may arise as to the classification of the goods, other than its description, quantity and FOB value, the customs authorities have to refer the dispute for adjudication to DCFF under Section 13 of the Act. It is only if the DGFT as the licensing and also adjudicating authority decides against the licensee, that the customs authorities will get jurisdiction to confiscate and levy penalty on such goods. The writ petition is allowed. The order of the Commissioner of Customs and Central Excise, Kanpur dated 30-3-2009 is set aside. - 1343 of 2009 - - - Dated:- 18-12-2009 - Sunil Ambwani and Virendra Singh, JJ. S/Shri Sharat p Agarwal, Sr. Advocate and Rahul Agrawal, for the Petitioner. S/Shri Ramesh Chandra Shukla and Ajay Bhanot, for the Respondent. [Judgment] - The petitioner-company is carrying on business of manufacture and export of steel castings, forged assembly parts and other products including forgings to various countries in Europe and USA and has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xported by the petitioner. The petitioner immediately took up the matter with DGFT giving all details about the manufacturing process undertaken by the petitioner and its job work. The DCFT by its letter dated 29-4-2008, addressed to the petitioner as follows: The undersigned is directed to refer to your letter dated 15th February, 2008 on the subject noted above It is informed that the case was considered by DEPB Committee (Inter-Ministerial Committee) at DGFT (Headquarters) and Committee after detailed discussion and perusal of the facts and figures along with the list of components required to manufacture the product 'Hatch" (placed before the committee), accordingly took the following decision:- The firm M/s. FTC Industries Ltd. Lucknow shall be entitled for DEPB for the product "Hatch" made predominantly of Stainless Steel (Not less than 90% by weight) under the DEPB rate notified at DEPB SI. No. 530B of Engineering products (Code 61). The firm would submit the copy of the bill of material to Customs authority at the port of export thereby specifying the components used, their weight along with the grade of stainless steel used justifying not less than 90% by weight clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riate to consider the stand taken by the Commissioner as well as DGFF. Shri V.K. Misra, Deputy Commissioner, Central Excise, Kanpur has stated in his counter affidavit that the description of the goods was deliberately manipulated by the exporter to fraudulently obtain maximum benefit under DEPB scheme, and thus goods have been rendered prohibited goods as soon as they were presented for export at the port in contravention of the Customs Act, 1962 rendering them liable for confiscation under the Customs Act. The DEPB credit is given by DGFF later, on the production of documents evidencing export of goods. When the export itself is fraudulent, no further benefits/incentives are allowable. The physical examination was procured by DRT from Central Revenue Control Laboratory (CRCL). The report of CRCL was not provided to DGFT. The CRCL has opined that sample appears to be a machine part made by different components by welding or clipping i2 fabrication process. The Central Revenue Control Laboratory (CRCL), New Delhi is government analytical laboratory and its report is completely trustworthy. The goods were not manufactured out of forging process but by fabrication process. The show c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng. Keeping in view the declaration made by the firm along with list of components the DGFF found that 'hatch' made predominantly of stainless steel is covered under DEPB Entry No. SI. 53GB subject to the condition as above. 11. Shri Bharat J. Agarwal submits that DEPB benefit is not extended under the provisions of Customs Act. It has its origin under export import policy pronounced periodically and that the benefit is administered entirely by DGFT under Ministry of Commerce of the Central Government. The Circular dated 3-6- 1997 clearly mentions that role of the custom authorities should be confined to the verification of correctness of the exporters declaration regarding description quantity and FOB value of the export product. The question whether the goods were actually exported or to be exported would fall under any classification and the correctness of the rates to be followed can be decided only by the licensing authority i.e. DGFF under Section 6 of the Act. In view of the para 2.3 of the policy quoted as above, framed under Section 5 of the Act read with circular issued by the Board, the questions regarding classification can be decided by DGFT. The customs authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty for an attempt to export goods improperly is provided in Section 114 and includes a penalty not exceeding 5 times of the value of goods or One thousand rupees, whichever is greater. If there is any prohibition enforced in respect of such goods, the penalty not exceeding five times, or Rupees one thousand, in case of dutiable goods other than prohibited goods, and in the case of drawbacks a penalty not exceeding five times the amount of draw back claimed or Rupees one thousand for short levy and non levy of duty can be levied. Section 114A provides for penalty under sub-section (2) of Section 28. 14. The Foreign Trade (Development and Regulation) Act, 1992 provides for development and regulation of foreign trade by facilitating imports into, and augmenting exports from India and for matters connected therewith or incidental thereto. The Director General of Foreign Trade is appointed under Section 6 and may be authorised under sub-section (3) by the Central Government that any power exercised by it other than powers under Section 3,5, 15, 16 and 19 may also be exercised by the Director General or such other officers subordinate to Director General. The Importer-Exporter Code ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er punishment, under any other law for the time being in force. If a person is liable under any other law, which may include Customs Act, 1962 for levy of penalty or confiscation, the same may be in addition to penalty or confiscation provided under Section 11 of the Foreign Trade (Development and Regulation) Act, 1992 and is also in addition to the suspension or cancellation of the license under the Act. 17. the Department of Revenue, Ministry of Finance, Government of India in its circular dated 3-6-1997 had clarified that the role of customs authorities in the matter of DEPB scheme introduced in the new export and import policy for the period 1997-2002 was confined to verification of correctness of exporters declaration regarding description, quantity, and FOB value of the export product. It is for the licensing authority to ensure that the credit is permitted at the correct rate as notified by DGFF. The word description occurring in this circular, does not extend to adjudication on description or classification. If there is any doubt to the description or classification at the time of verification, the matter has to be referred to DGFT for declaration under Section 13 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders of the customs authorities were quashed and set aside. 19. In this case the customs authorities alleged on the basis of a report of CRCL that the goods produced for export were not manufactured through forging process, but were welded or clipped. The report of CRCL was obtained ex pane without issuing notice or associating the petitioner in the inspections. The report verifies that the 'sample appears to be machine part made by different components by welding or clipping. The different components of the sample confirm to the composition of stainless steel, 18/8, except one component (nut part); one component (nut part) composition is other than stainless steel. The carbon contained in sample is less than 1.2% by weight, in each component of the sample. The description of the goods at the time of presenting them for export was not reported by CRCL to be non-conforming to the classification of the goods. The contents of the stainless steel was not in dispute. The customs authorities were concerned with the fact whether the goods meet the license classification namely whether the DE-343-5, 19 inches raised hatch (SS) Code No. 74 964, was i required to be a forged machine part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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