#GangesInternationalePrivateLimited – 𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐚𝐰 𝐎𝐟𝐟𝐢𝐜𝐞𝐬 (𝐀𝐋𝐎)

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 28.02.2026

CESTAT Chennai- Customs Department Cannot Deny DEPB Benefits Issued by DGFT

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai, recently delivered a significant judgment in the case of M/s. Ganges Internationale Private Limited vs. Commissioner of Customs, Trichy Commissionerate. The case revolved around the denial of Duty Entitlement Pass Book (DEPB) benefits by the Customs Department, despite valid DEPB scrips issued by the Directorate General of Foreign Trade (DGFT). The tribunal ruled in favor of the appellant, setting aside the order of the Commissioner of Customs and providing clarity on the jurisdictional authority of the Customs Department and DGFT in matters related to export incentives.

Background of the Case 

M/s. Ganges Internationale Private Limited, a Chennai-based manufacturer and exporter of transmission line towers and telecom towers, had claimed DEPB benefits for their exports under Sl. No. 24 of Product Group Code 61 (Engineering Products). The Customs Department alleged that the company had misdeclared telecom towers as galvanized transmission line towers to avail higher DEPB benefits, which they were not entitled to. The department argued that the DEPB benefits for telecom towers should have been claimed under Product Group Code 90 – Sl. No. 22D, which offered lower benefits.

The Directorate of Revenue Intelligence (DRI) initiated an investigation based on specific intelligence, leading to the issuance of a Show Cause Notice (SCN) by the Additional Director General of DRI, Chennai. The SCN proposed the cancellation of Let Export Orders (LEOs) issued for 564 shipping bills covering exports from February 2008 to September 2011. It also directed the reassessment of the goods under Section 17 of the Customs Act, 1962, and imposed penalties under Sections 114 and 114AA of the Act.

Key Arguments by the Appellant 

The appellant contested the SCN and the subsequent order, raising several key arguments:

Jurisdictional Authority: The appellant argued that the DGFT is the sole authority to determine the eligibility and rate of DEPB benefits. Customs authorities cannot unilaterally deny benefits granted by the DGFT.
Time Limitation: The appellant contended that the proceedings were barred by limitation under Section 28 of the Customs Act, which restricts demands to five years.
Misinterpretation of SION: The appellant argued that the Standard Input Output Norms (SION) under Sl. No. C220 applied to both transmission line towers and telecom towers, making both eligible for DEPB benefits under Sl. No. 24 of Product Code 61.
Misdeclaration Allegations: The appellant refuted the charge of misdeclaration, asserting that the description of goods in the shipping bills was consistent with the Customs Tariff Act, 1975.
Improper Reassessment: The appellant argued that reassessment under Section 17 of the Customs Act was not applicable to goods that had already been exported.

Key Findings of the Tribunal 

The CESTAT Chennai bench, comprising Hon’ble Judicial Member and Hon’ble Technical Member, delivered a detailed judgment addressing the issues raised in the appeal. The key findings are as follows:

1. DGFT’s Authority on DEPB Benefits 

The tribunal emphasized that the DGFT is the competent authority to determine the eligibility and rate of DEPB benefits. Customs authorities cannot unilaterally deny benefits granted by the DGFT. The tribunal cited several landmark judgments, including Titan Medical Systems Pvt. Ltd. vs. CC, New Delhi and Adani Exports Ltd. vs. Commissioner of Customs, to support this legal principle.

2. Misdeclaration Allegations

The tribunal dismissed the Customs Department’s allegations of misdeclaration, noting that the appellant had adopted the description of goods as per the Customs Tariff Act, 1975. The tribunal also clarified that the terms “transmission line towers” and “telecom towers” are not differentiated under the Customs Tariff Act, and the appellant’s classification was consistent with the tariff provisions.

3. Improper Reassessment

The tribunal held that reassessment under Section 17 of the Customs Act applies only to export goods prior to export and not to goods that have already been exported. The Customs Department exceeded its jurisdiction by ordering reassessment of goods that had already been cleared for export.

4. Cancellation of Let Export Orders 

The tribunal ruled that the Commissioner of Customs lacked the authority to cancel Let Export Orders (LEOs) without following the proper legal procedure under Section 129D of the Customs Act. The tribunal noted that the Commissioner had not quoted any statutory provision to justify the cancellation of LEOs.

5. Time Limitation

The tribunal rejected the Customs Department’s argument that the proceedings were not time-barred, emphasizing that the period of limitation under Section 28 of the Customs Act applies to cases involving confiscation and penalties under Sections 113 and 114.

Conclusion

The CESTAT Chennai’s judgment in this case is a landmark decision that reinforces the jurisdictional boundaries between the Customs Department and the DGFT. It underscores the principle that export incentives like DEPB benefits, once granted by the DGFT, cannot be unilaterally denied by Customs authorities. The judgment also provides clarity on the scope of reassessment under Section 17 of the Customs Act and the procedural requirements for canceling Let Export Orders.

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