2003 (11) TMI 129 - AT - Customs

Import - Advance licence - Demand - fraudulent mis-declaration and suppression of facts - Limitation - Duty exemption under Notification No. 204/92-Cus. - Penalty - legal maxim Lex non cogit ad imposibilia - HELD THAT - We observe that the Commissioner has dropped the duty demand as well as the notice for imposition of penalty on the ground that the mis-statement, and suppression by the licence holder has been made before the licensing authority and not before the Customs authority. We find that Section 28 speaks of non-levy/short-levy by reason of collusion, mis-statement, suppression etc. It is immaterial before which authority mis-statement/suppression was made. Since that has led to non-levy/short-levy, application of extended period under Section 28 cannot be ruled out. In any case, the legal maxim Lex non cogit ad imposibilia merely means that the law does not compel the doing of impossibilities . It is no one's case that the Quantity Based Advance Licence Scheme operating under Notification No. 204/92 is either a compulsory scheme or that it compels anyone to do the impossible. The scheme is designed to make available duty free inputs for the export product. The condition ensures that a person who has already taken credit of input duty does not avail of a second benefit by import of duty free goods. The fact that majority of exporters have availed of the scheme fulfilling the conditions under the scheme also goes to show that the conditions attached to the scheme are not impossible to comply with. Moreover, in this case fraudulent mis-declaration and suppression of facts before public authorities have been resorted to in order to make the licence transferable. Such blatant illegality cannot be an excuse for the purchaser of the licence to get a bounty from the public exchequer in the form of duty exemption, when the conditions of exemption notification have been contravened. We have, therefore, no hesitation in coming to the conclusion that the impugned order passed by the Commissioner allowing duty exemption and dropping the show cause notice without imposing any penalty on the licence holder is not sustainable in law. ​​​Thus, we set aside the impugned order and hold that the duty at applicable rate and in addition interest at applicable rate are payable on the impugned goods as the exemption under Notification No. 204/92-Cus., dated 19-5-1992 is not applicable in respect of the impugned goods. For quantification of the same and for determination of appropriate penalty, we remand the matter to the successor Commissioner to take a fresh decision after affording a reasonable opportunity of hearing to the respondents. However, while determining the penalty, the role of each of the respondents, particularly the submissions of the transferee that he had no role in the suppression and mis-statement, may be kept in view. Department's appeal is allowed in the above terms.

Summary

Issues involved: Duty exemption under Notification No. 204/92-Cus., mis-declaration, suppression of facts, transfer of licence, imposition of penalty.

1. Duty Exemption and Transfer of Licence:
The Department argued that duty exemption under Notification No. 204/92 was not applicable as the original licence holder had availed of Modvat credit, rendering the transfer of the licence illegal. The Tribunal referred to previous decisions and highlighted that duty exemption cannot be allowed if credit has been availed, even if the licensing authority allowed the transfer. The respondent argued they were not at fault as they had purchased the transferred licence.

2. Reversal of Credit and Refund:
The Tribunal noted that even though the duty credit was reversed, a refund was later claimed, making the credit effectively unreversed. This situation was deemed more favorable for the Department compared to previous cases, supporting the denial of duty exemption.

3. Mis-Statement and Suppression of Facts:
The Commissioner dropped the duty demand and penalty notice, citing that mis-statement and suppression were made before the licensing authority, not the Customs authority. The Tribunal clarified that non-levy/short-levy due to collusion or mis-statement can invoke the extended period under Section 28, regardless of the authority before which it occurred.

4. Legal Maxim and Compliance:
The Commissioner invoked the legal maxim 'Lex non cogit ad impossibilia' to argue that the importer, as a transferee, could not fulfill the Notification conditions. The Tribunal disagreed, stating that if the conditions for duty exemption were not met, the benefit could not be granted. Compliance with the scheme's conditions, designed for public interest, was deemed essential for duty exemption eligibility.

5. Fraudulent Mis-Declaration and Duty Exemption:
The Tribunal emphasized that fraudulent acts to make the licence transferable cannot justify duty exemption when conditions are violated. The impugned order allowing duty exemption without penalty was deemed legally unsustainable.

Conclusion:
The Tribunal set aside the impugned order, ruling that duty and interest were payable on the goods due to the inapplicability of duty exemption. The matter was remanded for a fresh decision on penalty, considering the roles of each respondent, particularly the transferee's claim of innocence in the mis-statement. The Department's appeal was allowed.