Customs Cannot Reassess Export Shipping Bills Or Deny DEPB Benefits After Export: CESTAT Delhi

The Principal Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), New Delhi, has held that Customs authorities cannot alter the value or description of goods after shipping bills have been assessed and exports completed. Any such change must be made through the statutory remedies available under the Customs Act.

Judicial Member Dr. Rachna Gupta and Technical Member P.V. Subba Rao passed the ruling while allowing appeals filed by Mungad Strips & Alloy Pvt. Ltd. and Jiji Industries Ltd. against an order of the Commissioner of Customs, Indore.

“Once the proper officer assessed the shipping bills and the LEO was issued, the Commissioner had no power to modify that assessment. Even if he felt that the shipping bills were wrongly assessed, the only proper course available to him would have been to file an appeal before Commissioner (Appeals),” the tribunal observed.

The dispute concerned exports made between December 2010 and January 2011 under the Duty Entitlement Passbook (DEPB) Scheme. Mungad Strips & Alloy exported aluminium alloy conductors and cross-linking agents. Jiji Industries exported aluminium alloy conductors. Both companies obtained DEPB scrips on the basis of those exports.

The Directorate General of Revenue Intelligence and the Directorate General of Central Excise Intelligence later investigated the exports. The department alleged that the goods had been exported at higher values to obtain DEPB scrips of higher value.

Acting on those allegations, the Commissioner rejected the declared value of the exported goods. The order also changed the description of the goods for assessment purposes. DEPB benefits were denied. Recovery of customs duty was ordered to the extent DEPB credits had been used.

The Commissioner also held the exported goods liable to confiscation. Penalties of ₹60 crore and ₹50 crore were imposed on Jiji Industries and Mungad Strips & Alloy, respectively.

Before the tribunal, the exporters argued that Customs authorities had examined the consignments before export. Let export orders had also been issued.

They contended that once the shipping bills were assessed and exports completed, the department could not reopen those assessments without following the procedures prescribed under law.

The tribunal accepted that contention. It held that goods cease to be “export goods” once they are exported. As a result, they cannot be subjected to a fresh assessment.

The tribunal noted that the law provides specific methods for modifying an assessment. None of those methods had been invoked in the present case.

“The customs officer has no locus-standi to issue or deny DEPB scrips. These are issued by the DGFT. If a DEPB scrip is issued, the importer can use it. The impugned order cannot be sustained even for this reason,” the tribunal observed.

The tribunal also held that goods already exported could not be confiscated. Since the duty demand itself could not survive, the penalties imposed on the exporters were also unsustainable.

Accordingly, the tribunal set aside the Commissioner's order insofar as it related to the two companies and allowed both appeals with consequential relief.

For Appellants: Advocates Akshay Anand and Shri Tushar Anand (for Jiji Industries Ltd.); none appeared for Mungad Strips & Alloy Pvt. Ltd.

For Revenue: P.R.V. Ramanan, Special Counsel