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TMI Blog2015 (11) TMI 1024X X X X Extracts X X X X X X X X Extracts X X X X ..... d and it is good title to holder for valuable consideration and the rights of such third party are required to be protected - demand of duty for the extended period of limitation cannot be sustained and therefore, the imposition of penalty would not be warranted - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... n, who imported goods, duty free by utilizing the DEPB Scrips sold by M/s. Trisuns. It has been alleged that M/s Trisuns had wrongfully availed DEPB credit on export of Castor Oil by misdeclaration the same as DTA produce, whereas, the goods originated from M/s. Trisuns in SEZ unit. So, the appellants herein availed the DEPB credit on the basis of DEPB Scrips fraudulently obtained by M/s. Trisuns. By the impugned order, the Adjudicating Authority confirmed the demand of duty alongwith interest and imposed penalties on M/s Trisuns on various issues. It has also confirmed the demand of duty equal to DEPB credit alongwith interest and imposed penalty of equal amount of duty against the importers (i.e. the appellants herein). 4. Heard both sides and perused the case reocords. 5. It is submitted by the appellants that the DEPB Scrip was valid at the time of importation of the goods, even at the stage of issue of Show Cause Notice and passing of the impugned adjudication order. The matter was heard at length on various dates. It is seen from the Tribunal Order No. I/163-233/2015 dated 29.04.2015., the Learned Authorised Representative for the Revenue requested time to take instruction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, within one year; (b) in any other case, within six months, from the relevant date, serve notice on the person chargeable with the duty or interest which has not been levied or charged or which has been so short-levied or part paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any duty has not been levied or has been short-levied or the interest has not been charged or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts by the importer or the exporter or the agent or employee of the importer or exporter, the provisions of this sub-section shall have effect as if for the words one year and six months, the words five years were substituted." 8. On plain reading of proviso to Section 28(1) of Customs Act, 1962, it is clear that the extended period of limitation of five years would be invoked in case any duty has not been levied or has been short-levied o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case that the core issue on which the whole case is pivoted is the DEPB scrips which were produced for seeking clearance of the imported goods by the various noticees (importers). The csrips were a result of fraudulent practice adopted by TCIL (B) and TCIL (Z) as already discussed in the foregoing paragraphs and as such does not give a validity to be admitted as a legal document for clearance of any imported goods. The scheme of notification 34/97-Cus is in the nature of permitting clearance of goods by debiting Duty Exemption Pass Book based on credits acquired instead of collecting cash. The DEPB as such is an instrument of payment of duty distinguishable from an import license. In fact as per the decision of Honble High court of Calcutta in the case of M/s ICI India Ltd., V/s Commissioner of Customs (Port) Calcutta (2005)(184) ELT 339(Cal):- "4. The DEPB licence/scrip is admittedly a negotiable one and is available in the market. Any one can purchase it from the market and avail of the credit out of it. This was so done by the appellant. But ultimately it was found that the said DEPB licences/scrips were forged. These facts are not in dispute as we find from the finding of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant produced the DEPB licenses purchased from the open market on payment of the consideration. There is no dispute that the said DEPB licenses were valid at the time of importation, even at the stage of show cause notice and adjudication order. So, the facts in case of M/s. ICI India Ltd. is distinguishable. The Honble Gujarat High Court in the case of Prayagraj Dyeing and Printing Mills Pvt. Ltd. vs. Union of India 2013 (290) E.L.T. 61 (Guj) while dealing with proviso to Section 11 A of the Central Excise Act, 1944 peri-materia to Section 28 of the Customs Act, 1962 observed that extended period cannot be invoked for mere failure to pay duty and positive evasion of duty is required for this purpose. In that case, the assesses availed the CENVAT credit on the basis of the invoices issued by the supplier, which was subsequently found forged. The Honble Gujarat High Court set-aside the demand, as extended period of limitation cannot be invoked for the reason, the original document issued by manufacturer were genuine, who became untraceable and its holder purchased for valuable of consideration, and taken CENVAT credit on its basis, who is not party of the fraud committed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pasayat who delivered the judgment of the Supreme Court in the case of Afloat (supra), in a subsequent case of Commissioner of Customs v. Ajay Kumar & Company, reported in 2009 (238) E.L.T. 387, clearly indicated that the same being not a case of forged document but one of issue of license by practising fraud, the Tribunal was right in holding that the transferee of the license should not be made liable. It may not be out of place to mention here that the Tribunal, in its judgment, reported in 2006 (205) E.L.T. 747 indicated in paragraph-7 as follows : "if that be so, the concept that a fraud vitiates everything would not be applicable to cases where a transaction of transfer of license is for value consideration without notice, arising out of mercantile transactions, governed by common law and not provisions of any statute." 12. The next question is whether demand of reversal is barred by the period of limitation. In our opinion, in view of our above finding that if the original document is issued even by practising fraud, a holder in due course for valuable consideration unless shown to be a party to a fraud, cannot be proceeded with by taking aid of a larger period of limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to be protected as held by the Honble High Court. The various decisions as placed by the appellants are as under:- (a) Commissioner of Customs, Amritsar vs. Patiala Castings Pvt. Ltd. 2012 (283) E.L.T. 269 (Tri.-Del.), it has been held as under:- "7. There is difference between a forged DEPB scrip, which is ab initio void, even if the same has been transferred on sale and a DEPB scrip actually issued by the DGFT, though on the basis of forged documents provided or false declaration made by the exporter, which is like a voidable contract. The two categories of DEPB scrips cannot be equated. In the former case, where the DEPB scrip, being forged/fabricated, is ab initio void, the judgment of Apex Court in case of Aafloat Textile Industries reported in 2009 (235) E.L.T. 587 (S.C.) will apply and duty can be demanded even from the transferee who had made duty free imports against the forged scrip and for this purpose, the principle of caveat emptor being applicable, longer limitation period under proviso to Section 28(1) would be applicable, while in the latter case, where the DEPB scrip had been validly issued by the DGFT, but being obtained by fraud/mis-declaration on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been cancelled by Deputy Chief Controller of Imports and Exports ab initio the Collector was right in holding that there was no valid authorisation for the import of the goods and goods have been imported in contravention of the provisions of the Import (Control) Order, 1955 read with Imports and Exports (Control) Act, 1947. We are unable to accept this contention of the learned counsel in view of the law laid down by this Court in East India Commercial Company Ltd. v. Collector of Customs, Calcutta (supra) wherein this Court has said :- "Nor there is any legal basis for the contention that licence obtained by misrepresentation makes the licence honest. With the result that the goods should be deemed to have been imported without licence in contravention of the order issued under S. 3 of the Act so as to bring the case within cl. (8) of s. 167 of the Sea Customs Act. Assuming that the principles of law of contract apply to the issue of a licence under the Act, a licence obtained by fraud is only voidable; it is good till avoided in the manner prescribed by law." 5. In the aforementioned decision of this Court it has been clearly laid down that in a case where the licence is ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ler/transferor M/s. Amber Exports, it is the provisions of Section 29 of the Sales of Goods Act readwith Sections 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; (iv) it is the above principle which has been followed by the Apex Court in case of East India Commercial reported in 1983 (13) E.L.T. 1342 (S.C.) (para 35) and by the Tribunal in the case of Hico Enterprises v. C.C., Mumbai (supra) (paras 30 and 31); and (v) the cases like this case, where a DEPB scrip actually issued by DGFT, though obtained by fraud by the Exporter, is used by a bona fide transferee who had no knowledge about the fraud committed by the Exporter, cannot be compared with the cases where the DEPB scrip had been forged/fabricated by a person and had not been issued at all by the DGFT and the forged/nonest DEPB scrip had been used for duty free imports by another person - in the second category of cases, it is the judgment of the Apex Court in case of Aafloat Textiles reported in 2009 (235) E.L.T. 587 (S.C.), which would apply." (d) In the case of Binani Cement Ltd. vs. Commissioner of Customs, Kandla 2010 (259 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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