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TMI Blog2011 (8) TMI 924X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue has made out a case that during the period 2002-03 to 2004-05 the FOB values and "Present Market values" for export goods were mis-declared by the Appellants on the higher side to claim undue DEPB benefit. 2. Para 7.36A of Public Notice No. 10/97 (P.N.), 97-2002 dated 21-5-1997 provides that the amount of Credit entitlement rate, in respect of export products whose DEPB rate is 15% or more, shall not exceed 50% of the PMV of the goods. 3.The following Circulars of CBEC are relevant: (i) CBEC's circular 69/97-Cus dated 08-12-97; (ii) CBEC's circular 27/2000-Cus dated 05-04-2010; 3.1 Extracts from CBEC's circular 69/97-Cus dated 08-12-97 is reproduced below: "1. As you are aware para 7.36A of Public Notice No. 10/97 (P.N.), 97-2002 dated 21-5-1997 provides that the amount of Credit entitlement rate, in respect of export products whose DEPB rate is 15% or more, shall not exceed 50% of the PMV of the goods. 2. Object of Limiting the amount of Credit Based on the Present Market Value (PMV) : The condition of restricting the credit-amount under DEPB Scheme to 50% of the PMV was prescribed to prevent the exporters from obtaining excessive amount of credit by inflati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been decided by the Board that for all products exported under DEPB Scheme, wherever FOB value cap has also been notified along with DEPB rate, PMV will not be verified by the Custom House. Circulars mentioned in the first para above shall also stand amended to this effect." 4. Revenue conducted investigations about the cost of the goods exported and also about sale price of similar goods in the local market, and also purchase price of some of the goods bought by them from local market and exported. They ascertained the present market value of the goods manufactured in the factory of the Appellant at Rs. 65.80 per Kg. They also found that some of the exported goods were bought by them at a price of Rs. 70 per Kg but the goods were exported at a price of Rs. 123 per Kg. Based on such facts Revenue issued a Show Cause Notice proposing action as proposed in para 34 of SCN which is reproduced below: "34 Now, therefore, M/s Kanak Metal Industries, 8/2, Jodhana Industrial Estate, Road No. 8 Basni, Jodhpur and Shri Mohammad Hussain Gauri, Managing Partner of M/s Kanak Metal Industries, Jodhpur are hereby called upon to show cause to the undersigned as to why : (i) The goods hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) DEPB benefit is to be granted by applying the rate prescribed for the commodity on the FOB value of goods exported. (iii) If such benefit is more than 50% of the PMV, it is to be restricted to 50% of PMV. Public Notice No. 10/97 (P.N.), 97-2002 dated 21-5-1997 does not say the DEPB rate is to be applied to PMV. 8. To illustrate let the DEPB rate be 20%. Let FOB value be Rs.100. Exporter can get DEPB credit of Rs.20. But if PMV is Rs. 30 only then DEPB credit will be Rs. 15 only. Annexure A to SCN is prepared with the understanding that DEPB benefit in such circumstances will be only Rs.6 and therefore the entire matter is initiated on wrong understanding of the provisions. 9.The confusion in this matter appears to emanate from circular para 5 of CBEC's circular 77/2002-Cus dated 27-11-2002. Extracts from the circular are given below: "3. The issue has been examined in consultation with the Directorate General of Foreign Trade. It has been decided in modification of the instructions contained in the above referred circulars that as a general rule, FOB value of the exports shall remain the basis for extending the DEPB credit since FOB value is recognised as the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned order does not result in excess benefit to the exporter as may be seen from the following rough calculation. 1. FOB Value declared 89621671 2. DEPB benefit at 20%-(actual rate varied from 13% to 20% but for 28 out of 33 Shipping Bills). This si why calculation is stated to be rough. 17924334 3. PMV decided in O-in-O 47422493 4. Maximum DEPB that can be granted @50% PMV 23711246 Since amount at S. No 2 above is less than amount at S. No. 4 above no case of excess DEPB benefit comes out even as per the adjudicated values. So it is obvious that the entire case is based on wrong understanding of facts and law especially the understanding that DEPB benefit is to be restricted to 20% (appr) of Rs. 47422493 as seen from calculations in Annexure A to SCN. Here the submission of the Appellant that DGFT has so far not revised the DEPB benefit is taken note of. 13. Both the sides occasionally (not consistently) understand that both FOB and PMV are interchangeable. In the first place the Appellant has declared the same value as FOB Value and PMV in many shipping bills. On the other hand the adjudicating officer has used the expression 'FOB/PMV' is used in para 1 of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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