2014 (3) TMI 872 - AT - Central Excise

Benefit of Notification No. 34/97 in terms of DEPB scrip - Procurement of DEPB scrip on the strength of forged/substituted shipping bills - Held that - Admittedly the export had taken place when the DEPB scrip were not cancelled by the DGFT and were still valid in the eyes of law. There is also no finding of any aiding and abating Beni Export by the appellant. The portion of the order of the adjudicating authority dropping the proposal to impose penalty does not stand appealed against by the Revenue - demand, having been raised by invoking the longer period of limitation is not sustainable. The same is accordingly set aside - Decided in favour of assessee.

Summary

Issues:
1. Import of goods under a claim of benefit of Notification No. 34/97 in terms of DEPB scrip purchased from a third party.
2. Cancellation of DEPB scrip due to forged/substituted shipping bills.
3. Initiation of proceedings against the importer for duty demand post cancellation of DEPB scrip.
4. Adjudication of Show Cause Notice confirming duty demand and interest but dropping penalty.
5. Upholding of the original adjudicating authority's order by Commissioner (Appeals).
6. Appellant's contention regarding non-involvement in fraudulent action and invoking extended period of limitation.
7. Application of legal precedents supporting the appellant's case.

Analysis:
1. The appellant imported goods under the claim of benefit of Notification No. 34/97 using DEPB scrip purchased from a third party, Beni Exports.
2. Subsequently, it was discovered that the DEPB scrip were procured by Beni Exports through forged/substituted shipping bills, leading to the cancellation of the DEPB scrip.
3. Proceedings were initiated against the appellant through a Show Cause Notice proposing a duty demand due to the import being based on fraudulently obtained and subsequently canceled DEPB scrip.
4. The original adjudicating authority confirmed the duty demand but dropped the penalty, noting the appellant's lack of involvement in the fraudulent actions of the exporter.
5. The Commissioner (Appeals) upheld the original adjudicating authority's order.
6. The main contention of the appellant was that they were not party to the fraudulent actions and thus the extended period of limitation should not be invoked against them.
7. The Tribunal, after considering legal precedents, found that the demand based on the longer period of limitation was not sustainable as the export occurred when the DEPB scrip were valid, and there was no evidence of collusion or aiding in the fraud by the appellant. Consequently, the demand was set aside, and the appeal was allowed in favor of the appellant.