Page 256 - ELT_1st September 2020_Vol 373_Part 5

694 EXCISE LAW TIMES [ Vol. 373

be rejected. Accordingly, a show cause notice was issued to the respondents
seeking to :
(a) re-classify the exported products under entry serial no. 65/531 of
engineering products instead of C-379 as claimed by the respond-
ent;
(b) restrict the DEPB credit sought to be availed by the respondent
amounting to Rs. 4,09,497/- to Rs. 1,61,245/-
(c) proposing to held the exported goods liable for confiscation under
Section 113(h)(i) Customs Act, 1962; and
(d) proposing to impose penalty under Sections 114/114A of the Cus-
toms Act, 1962.
After following due process, the original authority confirmed the re-classification
of the exported goods and restriction of the DEPB credit. Further, he held the
exported goods were liable for confiscation and as they were not available for
confiscation (having been already exported), he imposed a redemption fine of Rs.
5 lakhs under Section 125 of the Customs Act, 1962. He further imposed penalties
upon the respondent under Sections 114/114A and the Managing Director of the
respondent under Section 114.
5. Aggrieved, the appellant appealed to the First Appellate Authority,
who allowed their appeal and set aside the impugned order. Hence this appeal
by the Revenue on the following grounds :
(i) Learned First Appellate Authority has, while setting aside the re-
classification, relied upon the letter of the Directorate General of
Foreign Trade, New Delhi in which he had, in reply to the request
from the respondent group company for fixation of a special DEPB
rate for their products, clarified that their product was clearly cov-
ered by C-379 of the DEPB schedule. As can be seen from the clarifi-
cation from the DGFT it is not with respect to availment of the bene-
fits under DEPB scheme, but was only a reply to their request for
fixing a special standard input output norms. The standard input
output norms are a separate issue dealt with by the DGFT and it has
nothing to do with classification under any DEPB schedule. Further,
the letter was only with respect to one product, namely cylinder lin-
ers, whereas the exported goods were two different products name-
ly cylinder liners and top cap sleeves. Therefore, the First Appellate
Authority has erred in taking the letter of the DGFT to be a letter
clarifying the classification of the products under DEPB schedule.
(ii) Further, the EXIM Policy changes every year and the clarification
pertains to 7 years prior to the year of export. Therefore, same does
not apply to the present case. The Commissioner (Appeals), has not
examined the clarification issued by the DGFT and its applicability
to the DEPB scheme properly. Clarification by DGFT pertains to ad-
vance licence and Duty Free replenishment scheme to which Stand-
ard Input-Output Norms (SION) apply. SION do not apply to the
DEPB scheme. In the case of advance licence/DFRC scheme the ex-
porter is allowed import of raw material duty free as per the SION
during imports and exports. However, in case of DEPB scheme, the
exporter is allowed credit of an amount as a percentage of exports

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