2017 (7) TMI 702 - AT - Customs

DEPB benefits - cancellation of DEPB scrips on the ground that it was obtained by producing incorrect documents - Held that - Since the entire amount of duty amount stands discharged by M/s. Alpha Exports and some additional amount is seems to have been deposited by them, no liability arises on the respondent herein - when the perpetrator of the fraud, as in this case, has admitted of his role in that fraud and has admitted in writing that excess benefit of DEPB has actually accrued to him and not to the importer and finally has made good the loss of customs duty to the exchequer by paying the amount to the DRI, it would be extremely unjust and unfair to foist further penal action on the respondent - appeal dismissed - decided against Revenue.

Summary

Issues:
Interpretation of liability in case of fraudulently procured DEPB scrips.

Analysis:
The appeal was filed by the Revenue against an Order-in-Appeal, where the respondent was issued a show-cause notice for demand of duty liability on goods imported using DEPB scrips that were later cancelled by DGFT authorities as void ab initio. The respondent imported goods claiming benefits under these DEPB scrips. The adjudicating authority confirmed the demands raised, but the first appellate authority set aside the Order-in-Original, stating that the respondent was not aware of the incorrect documents used to procure the DEPB scrips.

The Revenue argued that liability arises on the purchaser if DEPB scrips were fraudulently procured by the seller, citing a judgment by the Hon'ble High Court of Punjab & Haryana. The respondent's representative contended that no liability arises on the respondent, providing correspondences showing that the seller had paid the duty liability arising from the DEPB scrips sold to various purchasers, including the respondent.

Upon careful consideration, the Tribunal found strong evidence supporting the respondent's position. The seller explicitly stated that the excess benefit from the DEPB scrips accrued to them and not the importer, and they had already recovered the value from the purchasers. The seller had discharged the duty liability on the DEPB scrips in question, and the duty amount was confirmed by the Order-in-Original. Therefore, the Tribunal concluded that no liability should be imposed on the respondent as the duty amount was already paid by the seller.

The Tribunal emphasized that fraud vitiates, but when the perpetrator admits their role, acknowledges the benefit accrued to them, and pays the duty amount to the authorities, it would be unjust to penalize the respondent further. Considering the facts and circumstances, the Tribunal upheld the impugned order, stating that no interference was necessary as the first appellate authority had correctly considered the case.

In conclusion, the appeal was rejected, and the impugned order was upheld, as no financial liability was deemed to be imposed on the respondent based on the actions of the seller in discharging the duty liability on the DEPB scrips.