The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad Bench ruled that Clarification given by Directorate General of Foreign Trade (DGFT) prevails over allegation made by Customs Department.
An intelligence was received by the department that the appellant, Amar Cold Storage is engaged in the manufacturing of “Surimi” and exporting the same in the name of processed, preserved and frozen surimi under the Duty Entitlement Passbook Scheme (DEPB) credit declaring the product under Sr. No.2 of the group code No. 66 of Fish and Fish Products of the DEPB Schedule.
A case was made out by the department on the ground that the product manufactured and exported by the appellant falls under Sr.No.1 of group code no.66 under the description of Fish and Fish Products including frozen meat and thus the appellant have wrongly taken benefit by availing DEPB.
A show cause notice was adjudicated by the adjudicating authority whereby, it was ordered for recovery of Rupees seventy-nine lakhs under proviso to Section 28(1) of the Customs Act, 1962 along with interest under Section 28AB and also imposed penalty of Rupees fifty lakhs under Section 114(ii) of the Customs Act, 1962. Being aggrieved by the Order, the appellant filed the present appeal.
R. Subramanya, Counsel appearing on behalf of the appellant submitted that after this clarification issued by DGFT in favour of the appellant, the DGFT vide letter withdrew the show cause notice and further submitted that as per the above sequential development and clarification by DGFT, the issue is no longer under dispute accordingly, the demand of DEPB credit is not admissible.
Dinesh Prithiani, Assistant Commissioner (AR) appearing on behalf of the revenue reiterates the finding of the impugned order and further submitted that the decision was taken to classify the appellant’s product under Sr.No.1 by the DEPB Committee vide corrigendum whereas, the clarification given in respect of appellant is only by way of letter and on that basis, it cannot be accepted that the product of the appellant is classifiable under Sr.No.2 of group code of 66 of DEPB Schedule.
The Coram consisting of Ramesh Nair, Judicial Member and Raju, Technical Member held that “In view of the above change of circumstances by way of clarification issued by the DGFT and withdrawal of the show causenotice, there was no scope for adjudicating authority to deviate from the decision taken by the DGFT to classify the goods under DEPB Entry at Sr.No.2/66 therefore, the adjudicating authority has no authority to sit over the policy decision taken by the DGFT.”
“We are therefore of the view that the clarification given by the DGFT will prevail over the allegation made by the Customs Department therefore, the entire adjudication order passed discarding the decision taken by the DGFT cannot be sustained” the Tribunal observed.
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