(1.) AFTER examining the records and hearing both sides, we have taken the view that the appeal itself should be disposed of finally at this stage and accordingly, after dispensing with predeposit, we have taken up the appeal.
(2.) THE appellants were engaged in the manufacture of terry towels, as 100% EOU and were debonded on their own request, by the Development Commissioner, MEPZ, later on. They seized to be 100% EOU in terms of the "Final Exit" Order dated 13.5.2003 of the Development Commissioner. Upon inquiries, officers of Customs found that the appellants had taken DEPB credit on goods which were manufactured prior to 13.5.2003 out of non -duty paid materials imported/indigenously procured under the EOU scheme and were exported after that date. It was also noticed that the export of goods under DEPB scheme and the availment of DEPB benefit on the export goods manufactured during the currency of EOU had not been disclosed to the department. Therefore, the party was directed to show cause why the exports in question should not be held to be inadmissible for DEPB benefit. In their reply to the show -cause notice, the appellants argued, inter alia, that the Customs authorities had no jurisdiction to deny DEPB credit to them. It was contended that the denial of the said benefit was within the exclusive jurisdiction of the authority which issued DEPB licence. The adjudicating authority [Commissioner of Customs] rejected this jurisdictional objection and proceeded to hold that the appellants were not entitled to DEPB benefit in respect of finished goods manufactured prior to 13.5.2003 out of non -duty -paid raw materials procured under the EOU scheme and that such finished goods exported under DEPB scheme were liable to confiscation under Section 113(d) of the Customs Act. Learned Commissioner also imposed a penalty of Rs. 10.00 lakhs on the party under Section 114(i) of the Act. The Commissioner's order is under challenge in the present appeal.
(3.) LEARNED senior advocate for the appellants has forcefully reiterated the jurisdictional objection. He pointed out that some of the exports of the above finished goods were made through Air Cargo (Complex, Chennai and, in respect of the same, DEPB credit was availed on the strength of two DEPB licences issued by the DGFT. It was submitted that, in adjudication of a show -cause notice issued by the department for denying the DEPB credit to the appellants, the Joint Commissioner of Customs (Air Cargo Complex) dropped the proceedings after noticing that the Customs authorities had no jurisdiction to disallow DEPB benefit to the exporter. Learned Counsel placed on record a copy of the Joint Commissioner's order [Order -in -Original No. 1350/2005 dated 6.10.2005]. Counsel also claimed that the department had accepted the Joint Commissioner's order. In support of his argument that the Customs authorities were not competent to sit in judgment over DGFT's decision on an exporter's claim for DEPB credit, learned Counsel cited the following decisions: