2013 (6) TMI 637 - AT - Customs

DEPB scrip issued by the Licencing Authority against misrepresenting/forged documents produced by the exporter - before cancellation of the DEPB scrip, the respondent had made duty free import against the same - Held that - DEPB scrip/license had been actually issued by DGFT, though against mis-representation and forged papers produced by the exporter & there is neither allegation nor evidence that the respondent was aware of the fraud committed by the exporter M/s Amber Exports at the time of making imports and at the time of import, in March 2000, the DEPB scrip was valid as the same was cancelled only on 7/12/04 In this case, when the respondent had obtained the DEPB scrip from M/s Amber Exports on transfer and at the time of its use for duty free imports, he was not aware of the fraud committed by the seller/transferor M/s Amber Exports, it is the provisions of Section 29 of the Sales of Goods Act read with Section 19 and 19A of the Contract Act which would be applicable and the respondent would have to be treated as having good title to the DEPB scrip. See Aafloat Textiles reported (2009 (2) TMI 75 - SUPREME COURT), Collector vs. Sneha Sales Corporation reported 1998 (9) TMI 99 - SUPREME COURT OF INDIA and Leader Valves Ltd. (2007 (3) TMI 166 - HIGH COURT, PUNJAB AND HARYANA).

Summary

Issues:
- Duty demand on imported goods against cancelled DEPB scrip
- Imposition of redemption fine
- Applicability of judgments in similar cases
- Bonafide transferee's liability in case of fraud by exporter

Analysis:
1. Duty Demand on Imported Goods: The case involved duty demand on imported goods against a cancelled DEPB scrip obtained through misrepresentation by the exporter. The Additional Commissioner confirmed the duty demand and imposed a redemption fine. However, the Commissioner (Appeals) set aside the duty demand and redemption fine based on relevant judgments.

2. Imposition of Redemption Fine: The Commissioner (Appeals) followed the Apex Court's judgment in Weston Components Ltd. vs. CC, New Delhi, which stated that a redemption fine can be imposed when goods are released against bond or undertaking. In this case, the goods were unconditionally released without any bond or undertaking, leading to the setting aside of the redemption fine.

3. Applicability of Judgments: The Tribunal referred to various judgments to determine the applicability of legal principles. The judgment in the case of Hico Enterprises vs. CC, Mumbai, upheld by the Apex Court, was cited to support the respondent's position. Additionally, the Tribunal distinguished the case from other judgments like ICI India Ltd. and Golden Tools International to establish the unique circumstances of the present case.

4. Bonafide Transferee's Liability: The Tribunal analyzed the respondent's liability as a bonafide transferee who was unaware of the fraud committed by the exporter. Citing legal principles from the Sales of Goods Act and Contract Act, the Tribunal concluded that the respondent had good title to the DEPB scrip and could not be held liable for duty demand based on the exporter's fraud.

5. Final Decision: Considering the facts and legal precedents, the Tribunal dismissed the Revenue's appeal, affirming the Commissioner (Appeals)'s decision to set aside the duty demand and redemption fine. The judgment highlighted the respondent's lack of involvement in the exporter's fraud and emphasized the principles governing bonafide transferees in such cases.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved and the reasoning behind the Tribunal's decision in the case.