2011 (1) TMI 71 - AT - Customs

DEPB licence - more than one DEPB licence holders who were the exporters who have allegedly indulged in fraud to get ineligible DEPB scrips - SDR submitted that the DEPB scrips have been obtained by mis representation and fraud by the licence holders - appellant has not chosen to initiate any civil/criminal proceedings against the seller of DEPB scrips - appellant was not guilty of any offence as mentioned in the proviso, the duty demand could not have been made for the extended period under the proviso to Section 28 - appeal succeeds on the ground of limitation and allowed

Summary

Issues:
- Confirmation of demand against the appellant for utilizing DEPB credit.
- Disallowance of DEPB credit and imposition of penalties on connected persons.
- Demand of customs duty from other transferees.
- Appellant's appeal against demand and comparison with similar cases.
- Validity of DEPB scrips obtained through misrepresentation and fraud.
- Consideration of multiple DEPB license holders involved in fraud.
- Comparison with judgments in cases of other transferees.
- Absence of findings of suppression or penalty against the appellant.
- Justification for setting aside the demand against the appellant.

Confirmation of Demand Against Appellant:
The appeal was against the Commissioner's order confirming a demand of Rs.33,74,866 against the appellant for utilizing DEPB credit. The DEPB licenses were obtained through misdeclaration and fraud by exporters, leading to inflated export values and ineligible duty credit. The appellant purchased DEPB licenses and utilized them for duty-free imports, resulting in the demand confirmation.

Disallowance of DEPB Credit and Penalties:
The Commissioner disallowed DEPB credit granted to exporters involved in fraud, including AMFPL, and imposed penalties. The appellant procured DEPB scrips from AMFPL and utilized credit, leading to the demand confirmation.

Demand of Customs Duty from Transferees:
Issues related to overvaluation of exports by other license holders like SMPL and RAI were addressed, with customs duty demands imposed on transferees like Kamani Oil Industries and ZYG Pharma Ltd.

Appellant's Appeal and Comparison with Similar Cases:
The appellant's advocate highlighted successful appeals by Kamani Oil Industries and ZYG Pharma Ltd. against demands confirmed by the same impugned order. These cases emphasized that duty demands could not be raised against transferees without evidence of fraud or collusion.

Validity of DEPB Scrips Obtained Through Fraud:
The SDR argued that DEPB scrips obtained through misrepresentation and fraud were not valid for transfer, even to bonafide parties like the appellant. The absence of civil/criminal proceedings against the scrip seller was used to justify the demand for wrongly utilized credit.

Consideration of Multiple License Holders Involved in Fraud:
The judgment addressed multiple DEPB license holders involved in fraud, with cancellations by DGFT for some exporters but not for AMFPL, raising questions about the reasons for the differing treatment.

Comparison with Judgments in Other Transferees' Cases:
The Tribunal's decisions in cases of ZYG Pharma Ltd. and Kamani Oil Industries, where demands were disallowed due to lack of evidence of fraud or collusion, were compared with the appellant's situation to support setting aside the demand.

Absence of Findings Against Appellant and Justification for Setting Aside Demand:
The appellant was in a better position than Kamani Oil Industries and ZYG Pharma Ltd., as there were no findings of suppression or penalties against them. The demand raised beyond the normal limitation period was deemed unjustified, leading to the appeal being allowed with consequential relief.