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2005 (9) TMI 625 - AT - CustomsAcquired and/or purchased transferable Value Based Advance Licences ( VBAL ) - Valid for import of Poly Propylene - fulfilment of conditions of DEEC Notification - Whether the benefit of legal maxim LEX NON COGIT AD IMPOSSIBILIA would be available to a valid recognized transferee to avail the benefit of the DEEC exemption Notification? - HELD THAT - As seen from the material on record, the Duty Exemption Scheme, which is part of the EXIM Policy 1992-97, is administrated by the Directorate General of Foreign Trade. Notification No. 203/92-Cus. has been issued to effectuate the exemption scheme laid down in Chapter 7 of the EXIM Policy. For this reason, issuing VBAL or QBAL, DEEC, execution of bond, legal undertaking, monitoring of import and export item, fulfilment of export obligation, realization of export proceeds, discharge of bond and legal undertaking have all been vested with the licensing authority. Certain special powers have been given to the DGFT/or the licensing authority to exercise the same in public interest. The Customs officers, while implementing the Notification 203/92-Cus., cannot question or appear to question the decisions and actions of the competent authority in the said Directorate unless it is strictly permitted by the terms of the Notification. The plain reading of condition (vii) makes it abundantly clear that benefit of Notification is to be extended to a person other than a person to whom the licence has been issued, if there is an endorsement of transfer by the licensing authority both on the VBAL and the DEEC. Benefit of Notification, cannot, therefore, be denied to the transferee on the ground of breach of condition (va). The Customs Authorities cannot question the powers of the licensing authorities unless it is mentioned in the Notification. We are of the considered opinion that the principles evolved in the case of Goodluck Industries and upheld by Apex Court in GOODLUCK INDUSTRIES 1999 (12) TMI 858 - SC ORDER and followed subsequently in other cases, is to be made applicable to the case on hand, since it is based on sound principle of law. Consequently, we uphold the contentions raised by the appellants while negating the contentions raised by the Department. Therefore the legal maxim LEX NON COGIT AD IMPOSSIBILIA can be invoked and benefit of the same be given to the transferee of the licence for claiming exemption under the Notification. The transferee cannot be called upon to fulfil the condition (v)(a) of the Notification No. 203/92-Cus. It is the original licencee, who has to satisfy the above referred condition, but not the transferee of the licence. In the result, the reference is answered accordingly.
Issues Involved:
1. Applicability of the legal maxim "LEX NON COGIT AD IMPOSSIBILIA" to a valid recognized transferee for availing the DEEC exemption Notification. 2. Whether the original licensee or the transferee of the license must satisfy the conditions of the DEEC exemption Notification. Issue-wise Detailed Analysis: 1. Applicability of the Legal Maxim "LEX NON COGIT AD IMPOSSIBILIA": The legal maxim "LEX NON COGIT AD IMPOSSIBILIA," meaning "the law does not compel a man to do that which he cannot possibly perform," was considered in the context of the transferee of an advance license. The Tribunal noted that the transferee of the license cannot be compelled to fulfill conditions that are beyond their control, such as proving that the original licensee did not avail of Modvat credit. The Tribunal emphasized that once the license is transferred with the endorsement of transferability by the DGFT, the transferee should be presumed to have fulfilled all conditions unless proven otherwise by the Customs Department. The principle was supported by the decision in the case of M/s. Special Steels Ltd., which highlighted that the transferee cannot be expected to perform an impossible act, such as verifying the actions of the original licensee. 2. Responsibility to Satisfy Conditions of the DEEC Exemption Notification: The Tribunal examined the conditions of Notification No. 203/92-Cus. and determined that certain conditions, such as the execution of a bond and the non-availment of Modvat credit, are primarily the responsibility of the original licensee. The satisfaction of these conditions by the original licensee is verified by the DGFT before endorsing the transferability of the license. The Customs Department cannot re-evaluate the fulfillment of these conditions once the DGFT has certified them. This is in line with the principle that the satisfaction arrived at by the DGFT is binding on the Customs Department. The Tribunal cited several judicial precedents, including the Supreme Court's decision in Chunni Lal Parshidai Lal and ITC v. CCE, which established that the Customs Department cannot question the certification provided by the DGFT. Notification No. 203/92-Cus. Conditions and Compliance: The Tribunal detailed the conditions of Notification No. 203/92-Cus., emphasizing that: - Condition (i) requires materials to be covered by a Value Based Duty Exemption Entitlement Certificate. - Condition (ii) involves the execution of a bond and a declaration by the importer, which is not necessary if the export obligation is already discharged. - Condition (v) mandates the fulfillment of export obligation without availing Modvat credit, which is verified by the DGFT. - Condition (vii) allows the benefit of the Notification to a transferee if the license bears the endorsement of transferability by the DGFT. The Tribunal concluded that the transferee, who imports goods based on a transferred license, is deemed to have satisfied these conditions once the DGFT has endorsed the license as transferable. The Customs Department's role is limited to ensuring the procedural compliance at the time of import and cannot question the DGFT's certification regarding the discharge of export obligations. Judicial Precedents and Legal Principles: The Tribunal relied on various judicial precedents to support its conclusions, including: - The Gujarat High Court's decision in Mahendra Petrochemicals Ltd. v. UOI, which affirmed that the DGFT's certification is binding on the Customs Department. - The Supreme Court's decision in ITC v. CCE, which held that the Customs authorities must act based on the certifications provided by the relevant authorities without re-evaluating them. - The Bombay High Court's decision in Taparia Overseas (P) Ltd., which established that the concept of fraud vitiating everything does not apply to bona fide transactions involving valuable consideration. Conclusion: The Tribunal upheld the contentions raised by the appellants, concluding that the transferee of the license is entitled to the benefit of Notification No. 203/92-Cus. without being required to fulfill conditions that are the responsibility of the original licensee. The legal maxim "LEX NON COGIT AD IMPOSSIBILIA" was invoked to support this conclusion, emphasizing that the law does not compel the transferee to perform impossible acts. The reference was answered in favor of the appellants, allowing them to claim the exemption under the Notification.
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