INTERNATIONAL CREATIVE FOODS LTD Vs. STATE OF KERALA

JUDGEMENT

(1.) Assessee is the revision petitioner. The revision has been filed against the order dated 11.11.2003 in T. A. No. 695 of 2003 of the Kerala Agricultural Income Tax and Sales Tax Appellate Tribunal, Additional Bench, Ernakulam. The assessment year is 2000-2001. The assessee filed an annual return for the year 2000-01 reporting a total and taxable turnover of Rs. 21,31,66,524.40 and nil respectively. The accounts were called and on verification, it was found that it cannot be accepted for the reasons that an amount of Rs. 9,810/- received as Export House Premium and Rs. 33,41,124.95 received as Duty Entitlement Pass Book (D.E.P.B.) Premium, which are liable to be assessed under S.5 of the Kerala General Sales Tax Act, were excluded in the return. Though time was granted, the assessee did not file any objection. The assessment was completed as proposed. The petitioner was unsuccessful in the appeals. Hence, this revision.

(2.) Learned senior counsel for the petitioner contended that the judgment of the Appellate Tribunal was wrong and hence be set aside. On the other hand, learned senior Government Pleader (Taxes) argued supporting the judgment of the Tribunal.

(3.) The D.E.P.B. Scheme was introduced as part of the Export - Import Policy 1997-2002. The object of the Scheme is to neutralise the incidence of customs duty on the import content of the export product. The neutralisation shall be provided by way of grant of duty credit against the export product. Under the D.E.P.B. Scheme an exporter may apply for credit, at a specified percentage of F.O.B. value of exports made in freely convertible currency. The credit shall be available against such export products and at such rates as may be specified by the Director General of Foreign Trade by way of Public Notice issued in this behalf, for import of raw materials, intermediates, components, parts, etc. For example if A is an exporter of kraft paper he will be entitled to the credit of Rs. 5/- for every F.O.B. of Rs.100/-. These rates are given under S.28(A) of Handbook of Procedure Volume 1. D.E.P.B. will be used as duty payment for import of raw materials, intermediates, components, parts, packaging materials etc. The D.E.P.B. shall be valid for a period of 12 months from the date of issue. D.E.P.B. and / or the items imported against it are freely transferable. There is no prior approval required from licensing authority. The D.E.P.B. holder can transfer the D.E.P.B. by issuing a transfer letter in favour of the person. The transfer letter is signed by authorised person of the company. His signature is verified by his banker so as to establish the genuineness of the signature. D.E.P.B. Scheme has got a market value. Its value depends upon the demand of the items which are allowed to be imported as per the D.E.P.B. If the demand is more the premium will be high and vice versa. Presently, the prevailing premium is around 113% of the D.E.P.B. amount. That means a holder of D.E.P.B. will get Rs. 113/- for every 100 rupees value of the D.E.P.B. The rate also depends on other factors like name of Port, etc. Even though D.E.P.B. can be utilised only for import at the ports will be allowed under T.R.A. facility as per the terms and conditions of the notifications issued by the Department of Revenue.