2017 (1) TMI 131 - AT - Customs

Legality of DEPB scrips - demand of duty and interest - scrips whether forged or not? - Held that - it is clear from the Order-in-Original itself that the DEPB scrips were per se not forged, but that scrips were obtained by fraudulent means by exporter - Analyzing the transaction between Jai Exports and appellant, the Commissioner (Appeals) has arrived at the conclusion that there is nothing even remotely to suggest that appellants were aware of the fraud committed by the exporter. He held that the purchase of the DEPB scrips by appellant was a bonafide commercial transaction - demand set aside. Jurisdiction of jurisdiction - Held that - the Commissioner (Appeals) has observed that the Show Cause Notice itself is issued without jurisdiction by the Assistant Commissioner. In that case even though, the contention of department that Order-in-Original passed by the Assistant commissioner lacks jurisdiction is to be accepted, no purpose will be served by remanding the matter as the Show Cause Notice itself is admittedly without jurisdiction - Remanding the matter as prayed by the department would be a futile exercise as the Show Cause Notice itself is without jurisdiction. Appeal dismissed - decided against Department.

Issues Involved: Jurisdiction of the adjudicating authority, fraudulent availment of benefit on DEPB Scrips, confirmation of duty demand and interest, appeal by the department against the order passed by Commissioner (Appeals), proper officer to deal with the dispute, legality of the Order-in-Original passed by the Assistant Commissioner.

Analysis:

1. Jurisdiction of the Adjudicating Authority:
The appeal was filed by the department against the order passed by the Commissioner (Appeals), who set aside the order of the adjudicating authority on merits. The department argued that the Assistant Commissioner, who passed the Order-in-Original, did not have the jurisdiction to do so. They contended that the proper officer to deal with the dispute was the Additional Commissioner, and since the order was passed by the Assistant Commissioner, it was null and void. The department sought to have the appeal allowed based on this jurisdictional issue.

2. Fraudulent Availment of Benefit on DEPB Scrips:
A Show Cause Notice was issued to the respondent, alleging fraudulent availment of benefit on DEPB Scrips. The Assistant Commissioner confirmed the demand of duty along with interest, stating that the DEPB scrips used by the appellants were forged. The respondent appealed to the Commissioner (Appeals) challenging the duty demand and interest confirmation. The department also appealed, claiming that the Assistant Commissioner lacked jurisdiction and should have confiscated the goods and imposed a penalty. The Commissioner (Appeals) allowed the appeal of the assessee, dismissing the department's appeal, based on the finding that the DEPB scrips were not per se forged, and the appellants were not aware of any fraud committed by the exporter.

3. Appeal by the Department:
The department's grievance was that the original authority should have confiscated the goods and imposed a penalty in addition to confirming the duty demand and interest. The department sought to remand the matter based on these grounds. However, the Commissioner (Appeals) found in favor of the assessee, holding that the DEPB scrips were obtained by fraudulent means by the exporter, but the appellants were not aware of this fraud. The Commissioner (Appeals) considered the transaction as a bonafide commercial one and set aside the duty demand and interest.

4. Legal Analysis and Conclusion:
The Commissioner (Appeals) analyzed the issue on its merits and ruled in favor of the assessee, setting aside the duty demand and interest. The Commissioner (Appeals) also noted that the Show Cause Notice itself was issued without jurisdiction by the Assistant Commissioner. Therefore, even if the Order-in-Original lacked jurisdiction, remanding the matter would be futile as the entire process was flawed from the start. As a result, the Commissioner (Appeals) dismissed the department's appeal, finding no merits in it, and provided consequential reliefs accordingly.

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