Case Law Research

CESTAT Mumbai : M/s Kinetic Engineering Ltd. Vs. Commissioner of Customs, Pune : 17th March, 2017 Featured



Appeal No.  C/72 & 73/07
(Arising out of Order-in-Original No. 09/Cus/2006 dated 27.9.2006 passed by the Commissioner of Customs, Pune).

M/s Kinetic Engineering Ltd.


Commissioner of Customs, Pune

Shri Karan Sarwagi, C.A. for Appellant
Shri S.J. Sahu, AC (AR) for Respondent


Date of Hearing: 24.02.2017
Date of Decision: 17.03.2017


Per: Raju

These appeals have been filed by M/s Kinetic Engineering Ltd. and Shri U.M. Nesarikar. The appellant, M/s Kinetic Engineering Ltd. had filed DEPB claim and drawback claim in respect of exports made by them. The said claim was rejected by the lower authorities. Aggrieved by the said order, M/s Kinetic Engineering Ltd. is in appeal before the Tribunal. In the said order, penalty was also imposed on Shri U.M. Nesarikar. Aggrieved by the said order, Shri Nesarikar is also in the appeal before Tribunal.

2. Learned Counsel for the appellant argued that they had exported the product consisting of Steering and Shaft in16 different consignments under claim of DEPB. The lower authorities rejected the claim of DEPB on the ground that the article consisting of Steering and Shaft is a composite article and there is no entry under the DEPB scheme for the shaft and therefore, in terms of para 11 of the General Instructions for the DEPB rates, the DEPB claim has been denied. He argued that Commissioner has wrongly come to a conclusion that there is no DEPB rate prescribed for the shaft. He pointed out that Sr. No. 416 and 429, which specifically mention as Seamless Stainless Steel Tubes and Carbon/Non-Alloy Steel Seamless Pipes/Tube respectively. He argued that the product shaft is nothing but the tube which has been welded to a steering wheel making it a composite product. He argued that in these circumstances, in terms of para 11 of the General Instructions for DEPB rate, they are entitled to the lower of the two rates applicable to steering and shaft. He argued that there is nothing in the Entry 416 and 429 of the Schedule to the DEPB rate for product code 61 that exclude shaft, which are nothing but seamless pipe on which some machining has been done.

2.1 Learned Counsel further argued that on certain items drawback has been denied. He argued that in show-cause notice, no grounds has been mentioned for denail of drawback and, therefore, it was not open to the adjudicating authority to deny the drawback rate when there is no allegation made in the show-cause notice.

3. Learned AR relied on the impugned order.

4. I have gone through the rival submissions. I find that it is not disputed that the steering is covered under the Entry 68A/68C of the Product Code 61 of the DEPB Schedule. It is also not disputed that the said shaft is nothing but steel tube which is partly machined and welded to the steering. I find that there is nothing under the Entry 416 or under Entry 429, which excludes the pipes on which some machining has done from the purview of the DEPB Schedule. The said Entry is read as follows: -

Sl. No.    Export Product    Rate (%)    Value Cap
416    Seamless Stainless Steel Tubes (Cold finished)    3    Rs.250/Kg
429    Carbon/Non Alloy Steel Seamless Pipes/Tube (Cold Finish or otherwise)    3   

In these circumstances, I find that in terms of clause 11 of the General Instructions for the DEPB rates, the appellants are entitled to the lower of the two rates of DEPB.

4.1 So far as claim of drawback is concerned, it is seen that there is no mention of any Entry against which drawback has claimed in the export documents. In these circumstances, the show-cause notice could not have given any specific reason for denial of drawback since the claim itself was vague. I find that the drawback has been rightly denied as above appellants are not contesting the same on merit.

4.2 I find that penalty of Rs.2 lakhs has been imposed on M/s Kinetic Engineering Ltd. on account of claiming inappropriate DEPB. I find that claim of DEPB is not totally inappropriate and the appellants are entitled to lower of the two rates. In these circumstances, penalty of Rs.2 lakhs is excessive and the same is reduced to Rs.20,000/- only.

4.3 Penalty of Rs.10,000/- has been imposed on other appellant in respect of same DEPB claim. I find that the same is excessive and the same is reduced to Rs.5,000/- only.

5. The appeals are allowed in the above terms.

(Pronounced in Court on 17.03.2017)

Member (Technical)


Additional Info

  • Date Range: Friday, 17 March 2017
  • Court/Authority: CESTAT
  • Tax Type: Customs duty
  • Petitioner/Appellant: M/s Kinetic Engineering Ltd. Vs. Commissioner of Customs, Pune
  • Respondent: M/s Kinetic Engineering Ltd. Vs. Commissioner of Customs, Pune
  • Appl no. or Appl year: Appeal No. C/72 & 73/07
  • Supreme Court Location: Delhi
  • CESTAT Location: Mumbai
  • AAR Location: Delhi
  • Authority: Supreme Court

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