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TMI Blog2012 (6) TMI 344X X X X Extracts X X X X X X X X Extracts X X X X ..... and penalty. In appeal Commissioner (Appeals) upheld the duty demanded but set aside fine and penalty. Both sides are aggrieved about the order of Commissioner (Appeals) and have filed these appeals. 2. This is a case where the Appellant purchased Duty Exemption Pass Book license No. 3010006203 dated 10-10-2000 from M/s Beni Exports ,Jalandhar and utilised it for payment of duty on goods imported by the Appellant under Bill of Entry No. 533 dated 12-10-2010 and BE No. 564 dated 19-10-2010. Later investigations conducted by revenue showed that the DEPB Scrip was obtained by fraud by Beni Exports. On 24-10-2001, DGFT Ludhiana cancelled the said DEPB scrip. 3. The short point in dispute is whether the duty forgone by the department on imports made by the Appellant using the said fraudulent DEPB scrip can be demanded and recovered from the Appellant. The Commissioner (Appeal) has waived the penalty imposed on the importer. Revenue has challenged such waiver. 4. The arguments on behalf of the Appellant are that they purchased the DEPB scrip in good faith against payment of consideration and utilized it under the bonafide belief that the license did not have any blemish. It is als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2009 (92) RLT 883 (SC) 4. CC vs. Leader Valves Ltd.-2007 (227) ELT A29 (SC) 5. CC vs. Hico Enterprises-2008 (228) ELT 161 (SC) 6. CC vs. Aafloat Textiles-2009 (91) RLT 719 (SC) 7. Larson Turbo Ltd. vs. CC-2007 (211) ELT 513 (SC) 7. The LD. DR on the other hand relies on the following decisions: (i) Friends Trading Co Vs. UOI-2010 (254) ELT 652 ( P H ) affirmed by Supreme Court in decision reported at 2010 (258) ELT A72 (SC). (ii) CC Vs. Sona Castings-2010 (259) ELT (Tri-Del) . 8. The facts in this case are identical to that in the case of Friends Trading Co. and that in the case of Sona Casting (Supra). DEPB scripts were obtained on the basis of fraudulent documents. The script was cancelled by DGFT only after import of the goods by the transferee of the license. Further demand was invoking the extanded period of the years. 9. The case of East India Commercial Co. Ltd is the earliest of the cases quoted by the Counsel for Appellant. This case was under the old Sea Customs Act, 1878. Further it was about violation of post import condition that the goods should have been used by the importer himself, that is the goods should not have been sold. So this decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not against the drawee . If he has not exercised due care about the bonafides of the transferor while purchasing scripts, adverse consequence due to such negligence will follow, as is the consequence of the decisions of the Apex Court in the cases of Aafloat Textiles and Friends Traders and needs no further discussion. 16. The only issue to be discussed is whether the extended period under section 28 of Customs Act can be invoked in such cases for demand of revenue loss caused to the exchequer by the fraudulent activity of the transferor by demanding duty foregone on imports made by the transferee. In the cases of Ajay Kumar and that of Leader Valves (supra) the Apex Court held that extended period cannot be invoked against the transferee. In the case of Aafloat Textiles and Friends Trading (Supra), the Apex Court took a contrary view. The latter decisions of the Apex Court are later decisions. Thus there has been a change in the approach of the Apex Court. We are bound by the views of the latest decisions of the Apex Court in this regard. 17. However we notice that the Honorable High Court of Punjab and Haryana has held in the case of The Mall Amritsar V. M/s Parkar Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies that the licences issued by DGFT authorities are issued after arriving at the satisfaction of various conditions / export obligations of the original licence holder. Such satisfaction arrived at by the DGFT authorities is binding on the customs department. The transferee of such licence cannot prove, once again, fulfilment of the obligations on the part of the original licence holder. It stands held by the Larger Bench that the maxim that fraud vitiate everything is not applicable in respect of third parties right created by bonafide transaction. The department can resort to any remedy ordinarily available under the law and proceed against the exporter, who procured the licence by mis-representing the facts. It stands observed by the Larger Bench that inasmuch as the transferability is granted by DGFT only after the export obligation is discharged by the licence holder in terms of DEEC scheme / notification including the satisfaction of the condition that exporter / licence holder has not availed the modvat credit on inputs, the transferee of the licences , who purchased the same from the open market and get the transfer endorsement from DGFT , can legally presume that export o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not effect the appellants right to import the goods free of duty, at the time, when the licence were admittedly valid licence . The appellant could not have forecast that the bonafide purchase of the licence from the market is going to be cancelled subsequently by the DGFT . Once the DGFT authorities issued the licence , it has to be presumed that the same were issued after satisfying the genuineness of the documents presented before them by the original licence holder. If DGFT has failed to examine, verify, and to arrive at a correct finding of fact of genuineness of such documents and issued the same and allowed the transfer of the same, a bonafide purchaser in the market cannot be held liable to bear the consequences of the lapses on the part of the DGFT . It cannot be out of place to mention here that the difference between a forged licence and the licence procured on the basis of mis representation is the same as the difference between a fake Rs.500 note or Rs.1000 note and genuine note transferred by the holder by making some mis-representation. Where as the fake Rs.500 /-note would mean as if there is no money in the hands of possessor of the same, the original Rs.500 /- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a third party cannot result in availability of longer period to the Revenue so as to raise the demand against the importer i.e. the person to whom the show cause notice is being issued. The various factors detailed in the said proviso must relate to the person to whom the show cause notice is being issued. Inasmuch as in the present case it is not the Revenue's stand that the present appellant mis-stated or suppressed any facts with intent to evade payment of duty or can be attributed with any other factor enumerated in the said proviso. I am of the view that demand of duty is to be held as barred by limitation. 25. For the above proposition, I again refer to the Tribunal's decision in the case of Ajay Kumar Co. as upheld by Hon'ble Supreme Court, referred in the preceded paragraph. Reference is also being made to the Tribunal's decision in the case of CC vs. Binani Cement Ltd. [2008 (231) ELT 171 (Tri-Ahmd )] wherein it was held as under :- "5. After considering the above statements, I find that the duty demand was made against the respondent under the provisions of Section 28(1) of the Customs Act which allows invocation of longer period in case of collusion, wilful misstate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collusion or suppression of facts within the meaning of proviso to Section 28 of the Customs Act. To the similar effect is the other decision of the Tribunal in the case of CCE Leader Valves Ltd. [2007 (218) ELT 349 ( P H )] laying down that the assessee not being party to the fraud committed by the original licence holder and having purchased the DEPB scrips from the market in the bonafide belief of its being genuine after paying full price. The extended period cannot be availed by the Revenue, inasmuch as the subsequent transferee importer cannot be accused or mis-representation collusion or mis-statement of facts within the meaning of proviso to section 28. The said judgement of Hon'ble Punjab Haryana High Court stands confirmed by the Hon'ble Supreme Court when the appeal filed by the Revenue was rejected, as reported in [2007 (227) ELT A 29 (SC)] . A reference to another decision of Punjab and Haryana High Court case can be made in the case of CC, Amritsar Vs. Deebee Marketing Pvt. Ltd. as and another judgement of Punjab and Haryana High Court in the case of CC, Amritsar vs. M/s. Fertichem India vide their order dated 27.1.2009 in Customs Appeal No. 23/2006 . In the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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