The Madras High Court has reaffirmed the decision of a single bench and dismissed the petition stating that in case of a conversion of yarn into denim 100% Export Oriented Units (EOU) was used and the provisions of Import-Export Policy clearly provide the benefit of DEPB/Duty Drawback.
The brief facts in the case of the Central Board of Excise and Custom(CBEC), Directorate General of Central Tax(DGCT), Director General of Foreign Trade(DGFT), the Joint Director General of Foreign Trade(JDGFT) vs. M/s K.G. Denim Limited is that the respondent is an assessee engaged in manufacturing yarn into denim fabric by the way of 100% EOU and the goods were exported out of India. So as a consequence M/s K.G. Denim Limited was granted the benefit of DEPB/Duty Drawback under Import-Export Policy.
The issue raised in this case was whether the assessee is entitled to claim the benefits of DEPB/Duty Drawback under Import Export policy through 100% Export Oriented Units (EOU) or not?
The division bench comprising of the Dr. Justice Vineet Kothari and Justice R. Suresh Kumar in the light of various precedents, specifically Commissioner of Custom, Tuticorin vs. Commissioner of Custom, Bangalore and held that in the case of conversion of yarn into a denim fabric through 100% Export Oriented Units (EOU) then as per the Import-Export Policy the benefits under DEPB/Duty Drawback can be allowed. And also noted that the revenue department has relied on the statutory notification which is issued by the central government and not with the circulars which have been issued by the Central Board of Excise and Custom(CBEC).
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