2012 (12) TMI 262 - AT - Central Excise

Duty demands limitation - appellants had purchased DEPB scrips obtained by M/s. Shree Krishna Impex alleged that the DEPB scrips were obtained by M/s. Shree Krishna Impex by over valuing the goods and therefore, correct value in the DEPB was not reflected and therefore the imports made by the appellants against such licenses have to be treated as non-duty paid Held that - DGFT has yet to decide whether the value declared for the purpose of obtaining DEPB scrips is correct or not and they have also not taken action to reduce the value of DEPB scrips or to cancel the same - action taken by the Revenue seems to me pre-mature - matter remanded - Waiver of pre-deposit allowed

Summary

Issues:
- Validity of duty demands on imports against DEPB scrips
- Imposition of penalties and interest on duty demands
- Verification of DEPB scrips and TRAs
- Applicability of previous court decisions on the case
- Allegations of fraud in obtaining DEPB scrips
- Consideration of limitation in issuing show cause notice

Analysis:

The judgment by the Appellate Tribunal CESTAT, Ahmedabad addressed multiple appeals concerning the validity of duty demands on imports against Duty Entitlement Pass Book (DEPB) scrips obtained by a specific entity. The department alleged that the DEPB scrips were acquired through overvaluation of goods, leading to incorrect values in the DEPB. Consequently, duty demands were confirmed against the appellants, accompanied by penalties and interest.

During the proceedings, the appellants argued that they purchased transferable DEPB scrips in good faith, fulfilling verification requirements through relevant ports and Trade Recovery Advice (TRA) issuance. They highlighted the lack of participation by the original DEPB holder in the proceedings and the absence of actions by the Directorate General of Foreign Trade (DGFT) to revise or cancel the DEPB values. The appellants contended that the department's reliance on a specific Supreme Court decision was misplaced, as the case did not involve fake or forged DEPB scrips but rather alleged overvaluation.

The department, represented by the learned Assistant Registrar, asserted that fraud tainted all subsequent transactions, implying that the DEPB scrips were fraudulently obtained due to confirmed overvaluation. This argument aimed to invalidate the appellants' claim of rightful ownership of the DEPB scrips.

After considering the submissions, the Tribunal found that the department's actions were premature, given the pending decision by the DGFT on the DEPB values and the absence of actions to rectify the situation. Acknowledging the complexity of the limitation issue and the need for detailed examination, the Tribunal granted a waiver of pre-deposit for all appellants and stayed the recovery of dues during the appeal's pendency. This decision was based on the appellants establishing a prima facie case of premature departmental action and the necessity to address the limitation aspect thoroughly.

In conclusion, the Tribunal's judgment provided relief to the appellants by granting a waiver of pre-deposit and staying the recovery of dues, emphasizing the need for further examination of the limitation issue and the premature nature of the department's actions.