2009 (3) TMI 169 - AT - Customs

DEPB fake and forged licences demand and recovery period of limitation held that - Although the Commissioner has recorded a finding in para 5.22 of the impugned order that the importers had colluded with broker M/s. Somanathan & Co. in obtaining fake DEPB licences, we find that there was no such allegation in the SCN and further, the finding of collusion also cannot be sustained for the reason that the Commissioner holds that the importers had not taken necessary precaution including conducting proper verification of the DEPB scrips etc., which, certainly, cannot be held to amount to collusion with the broker. There is not even a whisper that the importer had knowledge or reason to believe that the licences purchased from the broker were fake/forged. In these circumstances, the extended period of limitation is not attracted against the appellants. We, therefore, set aside the impugned order on the ground of limitation and allow the appeal.

Summary

Issues:
1. Import of Vinyl Chloride Monomer without payment of duty using fake DEPB licences.
2. Confiscation of imported goods, duty recovery, interest, and penalty imposition.
3. Limitation period for confirming duty demand against the importers.
4. Allegation of collusion and knowledge of fake/forged licences by the importers.

Analysis:
1. The appellants imported Vinyl Chloride Monomer using DEPB licences allegedly issued by ADGFT, Kanpur under an Exemption Notification. The licences were purchased from a broker, later found to be fake. A show-cause notice was issued proposing confiscation of goods, duty recovery of Rs. 95,29,591, interest, and penalty under the Customs Act.

2. The Commissioner confirmed the duty demand, interest, and imposed a penalty. The appeal was based on the ground of limitation. The demand under Section 28(1) required proof of importers' knowledge of the fake licences or collusion. Reference was made to legal precedents like Hico Enterprises and Aafloat Textiles to establish the necessity of such proof.

3. The Tribunal found that the allegation of collusion was not in the show-cause notice, and the finding lacked evidence. The Commissioner's assertion that importers did not verify the DEPB scrips did not amount to collusion. Importers were not shown to have knowledge of the fake licences, leading to the conclusion that the extended limitation period did not apply.

4. Consequently, the impugned order was set aside on the ground of limitation, and the appeal was allowed. The decision was based on the lack of evidence proving importers' knowledge or collusion regarding the fake licences. The judgment was delivered on 16-3-2009 by Ms. Jyoti Balasundaram, Vice-President of the Tribunal.