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High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE S.S. SUBRAMANI
J.G. Exports - Appellant
Versus
Commissioner of Customs, Chennai - Respondents
Writ Petition No. 8884 of 1998 in W.M.P. No. 13542 of 1998
Decided On : 20 July 1998
DEPB SCHEME - VERIFICATION OF LICENCES - DUTY ENTITLEMENT PASS BOOK (DEPB) LICENCES - [PARA 7.43 OF THE HANDBOOK OF PROCEDURES] - THE COURT DIRECTED THE AUTHORITIES TO COMPLETE THE VERIFICATION OF DEPB LICENCES AND PERMIT THE PETITIONER TO USE THE CREDITS GRANTED IN TERMS OF THE LICENCES, AS PER THE PROVISIONS OF PARA 7.43 OF THE HANDBOOK OF PROCEDURES ISSUED BY THE MINISTRY OF COMMERCE.
Fact of the Case:
THE PETITIONER, A FIRM ENGAGED IN THE EXPORT OF VARIOUS COMMODITIES, SOUGHT A WRIT OF MANDAMUS DIRECTING THE AUTHORITIES TO COMPLETE THE VERIFICATION OF FOUR DEPB LICENCES ISSUED BY THE MINISTRY OF COMMERCE AND PERMIT THE USE OF CREDITS GRANTED UNDER THE LICENCES. THE PETITIONER ARGUED THAT THE AUTHORITIES WERE UNJUSTIFIABLY DELAYING THE VERIFICATION PROCESS AND THAT THE CIRCULAR ISSUED BY THE MINISTRY OF FINANCE REQUIRED THE AUTHORITIES TO ACCEPT THE DECLARED FOB VALUE IF NO SHOW CAUSE NOTICE WAS ISSUED WITHIN 30 DAYS FROM THE DATE OF EXPORT.
Finding of the Court:
THE COURT FOUND THAT THE AUTHORITIES HAD NOT TAKEN ANY ACTION TO CHALLENGE THE DECLARED FOB VALUE WITHIN 30 DAYS FROM THE DATE OF EXPORT, AS REQUIRED BY THE CIRCULAR ISSUED BY THE MINISTRY OF FINANCE. THE COURT ALSO FOUND THAT THE AUTHORITIES WERE BOUND BY THE CIRCULARS ISSUED BY THE MINISTRY OF FINANCE AND COULD NOT CONDUCT FURTHER ENQUIRIES BEYOND THE SCOPE OF THE CIRCULARS.
Issues: 1. WHETHER THE AUTHORITIES WERE JUSTIFIED IN DELAYING THE VERIFICATION OF THE DEPB LICENCES. 2. WHETHER THE AUTHORITIES WERE BOUND BY THE CIRCULAR ISSUED BY THE MINISTRY OF FINANCE REQUIRING THEM TO ACCEPT THE DECLARED FOB VALUE IF NO SHOW CAUSE NOTICE WAS ISSUED WITHIN 30 DAYS FROM THE DATE OF EXPORT.
Ratio Decidendi: THE COURT RELIED ON THE CIRCULAR ISSUED BY THE MINISTRY OF FINANCE, WHICH REQUIRED THE AUTHORITIES TO ACCEPT THE DECLARED FOB VALUE IF NO SHOW CAUSE NOTICE WAS ISSUED WITHIN 30 DAYS FROM THE DATE OF EXPORT. THE COURT ALSO RELIED ON THE SUPREME COURT DECISION IN COLLECTOR OF CENTRAL EXCISE, PATNA V. USHA MARTIN INDUSTRIES, WHICH HELD THAT THE DEPARTMENT IS BOUND BY THE CIRCULARS ISSUED BY THE BOARD AND CANNOT TAKE A STAND CONTRARY TO SUCH INSTRUCTIONS.
Final Decision: THE COURT ALLOWED THE WRIT PETITION AND DIRECTED THE AUTHORITIES TO COMPLETE THE VERIFICATION OF THE DEPB LICENCES AND PERMIT THE PETITIONER TO USE THE CREDITS GRANTED IN TERMS OF THE LICENCES, AS PER THE PROVISIONS OF PARA 7.43 OF THE HANDBOOK OF PROCEDURES ISSUED BY THE MINISTRY OF COMMERCE.
The Order of the Court is as follows :-
Petitioner seeks issuance of writ ofmandamusdirecting the second and the third respondents to complete the verification of the following Duty Entitlement Pass Book (hereinafter referred to as DEPB) licences : (i) 04600645, dated 4-6-1998; (ii) 04600567, dated 19-5-1998; (iii) 04600569, dated 20-5-1998 and (iv) 04600571, dated 21-4-1998 issued by the fourth respondent strictly in accordance with the provisions of paragraph 7.43 of the Hand Book of procedures issued by the Ministry of Commerce and permit the petitioner-firm to use the credits granted in terms of the said licences.
2.Petitioner is a firm engaged in business of exports of various commodities. The Government of India through the Ministry of Commerce has formulated a scheme called Duty Entitlement Pass Book Scheme (DEPB Scheme), which is decided in Chapter 7 para 7.25 of the Export-Import Policy for the period 1997-2002 announced by the Ministry of Commerce, Government of India.
3.As per the said scheme, on export of specified goods, the exporter will be eligible to claim a credit at a specified percentage of Free on Board (FOB) value of exports. The rate at which the credit can be availed and the items against export of which such credit are permitted are specified by the Director General of Foreign Trade, Ministry of Commerce, from time to time. The credits taken on the basis of the said export can be utilised for payment of Import Customs Duty on the import of any items except those covered in the negative list of Imports as specified in the Export-Import Policy.
4.As per the procedure of export of goods relevant shipping bills passed by the Customs Authorities are to be submitted to the licensing authorities along with the application of DEPB licence and credit based on the application submitted from the licensing authority will issue DEPB licences indicating the credits granted and the details of the relevant shipping bills based on which such credits are granted.
5.The Customs Authorities before allowing imports against the credits granted by the licensing authorities shall verify the details of the Exports as given on the DEPB licences as per their records.
6.Suitable instructions have been given by the Central Board of Excise and Customs, New Delhi to the Field Customs Authorities from time to time. These circulars relate to the procedure to be adopted, the verification of the values declared and the need for permitting exports and carrying out the verification without delay.
7.It is stated that Circulars bearing Nos. 10/97, dated 17-4-1997; 15/97, dated 3-6-1997; 69/97, dated 8-12-1997 are issued by the Ministry of Finance, Department of Revenue. It is also stated that since the granting of credits is as a percentage of the export value, to check the correctness of the export value declared in the shipping bills. The concept known as present market value has been described in the Export-Import Policy.
8.Paragraph 7.36 of the Hand Book of Procedure 1997-2002 provided that in respect of products where the rate of credit against such export products is 15% or more, the credit given should not exceed 50% of the present market value of the export products.
9.It is the case of the petitioner that in terms of Circular No. 15/97, dated 3-6-1997 the Ministry of Finance for the purpose of percentage of credit, stated that the present market value should be verified by the proper officer of the Customs and at the time of examination of the goods, if the FOB price declared appears to be high, there is a provision to clear such shipping bills with endorsement 'provisionally cleared for exports'. In such cases, the designated authority of the Ministry of Commerce will not be accepting the value declared for the purpose of giving credit. Subsequently, another circular was issued in No. 69/97, dated 8-12-1997 wherein the above instructions were modified. It was stipulated therein that FOB value declared appears to be high and a sh
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