2010 (2) TMI 394 - AT - Central Excise

Confiscation and penalty- Input stage credit availed and Condition No. V of Notification not fulfilled alleged. Export of finished goods by merchant exporter hence input stage credit could not have been availed, contended by the assessee. No evidence in Commissioner s order that input stage credit availed by merchant-exporter hence input stage credit could not have availed, contended by assessee. No evidence in Commissioner s order that input stage credit availed by merchant exporter or any supporting exporter. Benefit of lex Non Cogit impossibillia claimed by assessee. Held that- benefit to legal maxim available to assessee being transferee of advance licence, cannot be called to fulfill condition V(a) of Notification. In view of Larger bench decision affirmed by Apex Court, original licence to satisfy said condition. Commissioner s decision unsustainable inasmuch as benefit of legal maxim available to assessee therefore impossible for assessee to violate said condition. Impugned order set aside.

Summary

Issues:
1. Interpretation of legal maxim LEX NON COGIT AD IMPOSSIBILIA for availing DEEC exemption.
2. Liability of original licensee vs. transferee of the license in fulfilling conditions of Notification No. 203/92-Cus.

Analysis:
1. The appeal involved the interpretation of the legal maxim LEX NON COGIT AD IMPOSSIBILIA in the context of availing the DEEC exemption. The Larger Bench considered whether this legal maxim would be available to a valid recognized transferee to avail the benefit of the DEEC exemption Notification, or if the original licensee is responsible for satisfying the conditions of the notification. The Larger Bench ruled in favor of the appellant, the transferee of the advance license, stating that the original licensee is required to satisfy the conditions, not the transferee. Therefore, the benefit of the legal maxim was deemed applicable to the appellant.

2. The appellant had imported polypropylene under Notification No. 203/92-Cus. and filed a Bill of Entry for duty-free clearance. However, the department found that the appellant had not complied with Condition V of the notification, leading to show-cause notices being issued. The Commissioner demanded duty from the appellant and imposed penalties for non-compliance. The appellant argued that it was impossible for them to have availed input stage credit and, therefore, they should not be held liable for breaching the condition. The Larger Bench's decision and the Apex Court's judgment affirmed that the liabilities related to the condition would be fixed on the exporter of finished goods, not the appellant as the transferee. Consequently, the duty demand and penalties imposed on the appellant were deemed unjustified.

3. In conclusion, the Tribunal set aside the Commissioner's order adverse to the appellant and allowed the appeal. The decision highlighted that the benefit of the legal maxim LEX NON COGIT AD IMPOSSIBILIA applied to the appellant as the transferee, absolving them of liability for breaching Condition V of the notification. The judgment emphasized the distinction between the responsibilities of the original licensee and the transferee in fulfilling the conditions of the DEEC exemption, ultimately ruling in favor of the appellant and overturning the Commissioner's decision.