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2016 (2) TMI 731 - HC - CustomsExtended period of limitation - alleged that DEPB Scrips were obtained by the importer fraudulently - import under fake / fraudulent DEPB licence - Held that - where the appellants did not have any role in the fraud and no fraud had been practised by said person, the Revenue cannot get the benefit of extended period of limitation when such person is not party to the fraud. It is apparent that the impugned order passed by the Tribunal is based upon findings of fact recorded by it upon appreciation of the evidence on record. The Tribunal has thereafter merely applied the decision of the Jurisdictional High Court to the facts of the case by holding that the extended period of limitation could not be invoked in the facts of the present case. The conclusion of the Tribunal being based upon findings of fact recorded by it does not give rise to any question of law much less, a substantial question of law so as to warrant interference. - Decided against the revenue.
Issues:
1. Whether the extended period of limitation can be invoked in a case involving fraudulently obtained DEPB scrips? 2. Whether the importer is liable for duty, interest, and penalties due to fraud in obtaining DEPB scrips? 3. Whether the importer can derive credit from a forged DEPB scrip? 4. Whether collusion or fraud on the part of the importer is relevant in the case of import under fake/fraudulent DEPB license? Analysis: Issue 1: The appeal under section 130 of the Customs Act, 1962 questions the Tribunal's order on whether the extended period of limitation can be invoked in a case where DEPB scrips were obtained fraudulently. The importer bought transferable DEPB scrips in 2000 which were originally issued fraudulently. The Commissioner of Customs proposed a demand for duty, interest, and penalties. The Tribunal held that the extended period of limitation could not be invoked in this case, leading to the rejection of the demand. Issue 2: The Tribunal's decision was based on the fact that the importer had availed credit on valid DEPB scrips issued by the DGFT authorities at the time of import. Even though the exporter manipulated the export document leading to cancellation of the DEPB scrips in 2004, the importer was not found to have colluded or willfully misrepresented facts. The Tribunal referred to a previous High Court decision stating that if a person is not party to fraud, the Revenue cannot benefit from the extended period of limitation. Thus, the demand for duty with interest was deemed barred by limitation, and penalties were not justified. Issue 3: Regarding the validity of DEPB scrips, the Tribunal emphasized that the importer had imported goods based on valid documents at the time of importation. The DEPB scrips were not forged during import, and the cancellation in 2004 did not retroactively affect the validity of the documents until they were set aside. The Tribunal highlighted that credit can only be derived from a valid DEPB, and the importer did not engage in fraud during the import process. Issue 4: The Tribunal's decision underscored that the importer's lack of involvement in the fraud related to the DEPB scrips led to the conclusion that the extended period of limitation could not be invoked. The Tribunal's reliance on factual findings and legal precedents demonstrated that the importer, not being party to the fraud, could not be held liable for duty, interest, and penalties beyond the statutory limitations. The judgment was based on the application of legal principles to the specific facts of the case, leading to the rejection of the appeal. In conclusion, the High Court upheld the Tribunal's decision, emphasizing that the findings were based on facts and did not raise any substantial questions of law warranting interference. The appeal was rejected, affirming the Tribunal's ruling on the issues related to the fraudulent DEPB scrips and the importer's liability for duty, interest, and penalties.
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