2006 (4) TMI 377 - AT - Customs

Import - DEPB scrips procured by original allottee by fraud - Demand - Limitation - HELD THAT - By applying the ratio as laid down in the case of Union of India v. Sampatraj Dugar 1992 (1) TMI 103 - SUPREME COURT ; Bombay v. Sneha Sales Corporation 1998 (9) TMI 99 - SUPREME COURT and Taparia Overseas (P) Ltd. v. Union of India 2003 (1) TMI 127 - BOMBAY HIGH COURT , to the fact of the present case, it has to be held that the imports made under the DEPB Scrips, which were valid at the time of import, the subsequent cancellation of the same on the ground that original allottee procured them by fraud will not have any bearing upon the imports made by the appellant. There is nothing in the impinged order to reflect upon any mala fide on the part of the appellant or to show that he was a party to the fraudulent obtaining of scrips by M/s. Parker or had any knowledge about the tainted character of the scrips. As such, we are of the view that the imports made by the appellant in terms of the said scrips cannot be held invalid. We also find force in the appellant s contention that the import having been made in the year 2000, subsequent raising of demands by way of issuance of show cause notices dt. 30-5-2002 and 12-6-2002 are hopelessly barred by limitation, inasmuch as, no suppression or mis-statement with intent to evade duty can be attributed to the appellant. Accordingly we hold the demands to be barred by limitation. Thus, the appeal is allowed with consequential relief to the appellant.

Summary

Issues:
Dispute over DEPB Scrips procurement and subsequent importation; Allegations of fraudulent obtaining of scrips; Proceedings initiated against the appellant for duty payment; Contention regarding limitation period for issuing notices; Validity of imports made under DEPB Scrips; Application of legal precedents on cancellation of import licenses.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi involved a dispute regarding the procurement of DEPB Scrips and subsequent importation by a partnership firm. The firm acquired the scrips from a company, which in turn obtained them from another entity. The Customs authorities cleared the goods without objections based on the filed Bills of Entries. However, investigations were initiated later due to suspicions of fraudulent obtaining of the scrips by the initial entity, leading to proceedings against the appellant for duty payment under the Customs Act.

The appellant contended that they were bona fide purchasers of the DEPB Scrips and the notices issued against them were time-barred as the imports were made two years prior, holding valid scrips at that time. The Commissioner confirmed a substantial demand against the appellant, which was contested. The Tribunal referred to legal precedents emphasizing that goods imported under valid licenses cannot be subjected to duty if the licenses were later cancelled due to fraud by the original holder. The Tribunal found no evidence of mala fide on the appellant's part or knowledge of the fraudulent nature of the scrips, thereby validating the imports made by the appellant.

Moreover, the Tribunal agreed with the appellant's argument that the demands raised through show cause notices after a significant time had lapsed were barred by limitation, as there was no intent to evade duty evident. Ultimately, the Tribunal allowed the appeal, granting relief to the appellant based on the application of legal principles and the specific circumstances of the case.

In conclusion, the judgment highlighted the importance of validly obtained licenses for importation and the limitations on retrospective actions in cases of alleged fraud. The decision underscored the need for clear evidence of wrongdoing and adherence to statutory limitations in demanding duties, ensuring fairness and legal certainty in customs matters.