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TMI Blog2015 (12) TMI 1299X X X X Extracts X X X X X X X X Extracts X X X X ..... e present proceedings for the periods prior to 28/5/2012. This provision has been made to give the department a tool also to recover Customs duty even from a person other than the importer of the goods. It is also observed that proviso to Section 28AAA(1) does not absolve the actual importer from payment of duty. Further Hon ble Apex Court in the case of Tata Iron & Steel Co. Ltd. Vs. C.C. Mumbai (2015 (8) TMI 290 - SUPREME COURT) has held that extended period is available to the Revenue for demanding duty from the transferres also.State cannot be deprived of its share of duty if the same is claimed exemption by fraudulent acts of the exporters in the present proceedings. Duty demands and interest have been correctly confirmed by the Adjudicating authority against all the appellants. However, we are of the considered opinion that penalties are not imposable upon the transferee appellants as they have no knowledge of the nature of goods used and exported by the manufacturers/exporters. Accordingly, penalties imposed upon the transferee appellants are set aside. - Decided partly in favour of assessee. - Stay Petition Nos. 75823-75826/14, 75834, 75880/14, 75802/14 to 75804/1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of the transferees of DFIA licences that they have acquired the said licenses under a bonafide belief that these licenses are genuine and issued by the appropriate authority. That from paras 6,12,16 17 of the Order-in-Original dated 28/2/2014 allegation of mis-declaration was based on the assumption drawn on the basis of test reports of past exports and on an assumption based on certain records regarding supply of certain raw materials. That no sample for testing has been drawn with respect to the exports of the consignments under consideration. That test reports of the past consignments cannot be held to be admissible evidences for the subsequent exports as held by CESTAT in the case of Well Knit Apparel Pvt. Ltd. Vs. C.C., Madras [1999 (106) ELT 431 (Tribunal). That charge in the show cause notices is based only on certain statements of individuals without any other material corroboration which is not admissible as per Calcutta High Court s order in the case of Manindra Chandra Dey Vs. CEGAT- 1992 (58) E.L.T. 192 (Cal.) (writ petition No. 4015 of 1990 decided on 12/9/1991). 3. Appeals No. C/75735/14 to 75737/14, arising out of same Order-in-Original dated-28/02/2014, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UOI [2003 (161) ELT 47 (Bom)] vi) That in view of the above case laws, once licenses were validly issued and purchased by the appellants then no duty can be recovered from the transferee till the said DFIA Licenses are cancelled by the appropriate DGFT authorities. vii) That for any fraud on the part of exporters duty could still be demanded from the exporters under Section 28 AAA of the Customs Act, 1962. 4. Shri S.P. Pal (Appraiser) A.R., Shri A. Kumar, A.C. (A.R.) appearing on behalf of the Revenue argued that this issue, involved in these proceedings against the appellants, has already been settled by Calcutta High Court in the case of ICI India Ltd. Vs. CC (Port) Calcutta [2005 (184) ELT 339(Cal.)] which has been upheld by Supreme Court and has also been followed subsequently in several case laws by CESTAT High Courts. Learned A.R., therefore, strongly defended the order passed by the Adjudicating authority against all the appellants. 5. Heard both sides to each appeal and perused the case records. Appellants mentioned at Sr. No. (1) to (6) were heard on 29/9/2015 whereas those at Sr. No. (7) to (9) were heard on 18/11/2015. As the issues involved in all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the export product Fabrics/Made-ups/Sarees 2 Dup. on Silk Yarn (gummed and untwisted Or Dupion Silk Yarn (de-gummed and twisted). 1.39kg/ kg content in export product Or 1.05 kg/kg contentin export product. 5.1 Out of the 23 DFIA Licenses, 3 DFIA Licenses (No.021010087 dt. 16/52007; 0210104123 dt. 19/9/2007 02 101 04780 dt. 4/10/2007) were made transferable and were also utilized by other appellants (Transferees) for duty free imports. Remaining 20 DFIA. Licenses were surrendered by M/s. Gemini Overseas Ltd. which also include licenses with respect seized live export consignments. Documents tendered by Shri Mohanlal Singhania of M/s. Gemini Overseas Ltd. indicated Noil Yarn, Mulberry Silk and other yarns received by the appellant and subsequently issued to the weavers under cover of issue challans. As per the calculations done by the investigation, from the records supplied by M/s. Gemini Overseas Ltd., Mulberry Silk Yarn supplied to weavers only represented 6.24% to 6.68% of the total weight of the fabrics and the yarns supplied to weave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. and manufactured by M/s. Eastern Silk Industries Ltd. remained the same throughout the period of export.The documents showing supply of natural silk yarn and its percentage contained in the finished fabrics exported has been clearly brought out by the Adjudicating authority in paras 42 (i) 42 (ii) of the Order-in-Original dated 28/2/2014. This data is made from the documents recovered from the appellants. 7. Appellants have also taken an argument that said DFIA Licenses have not been cancelled by the Licensing authorities so far and no action can be taken against the appellants till those licenses are cancelled. Appellants have, interalia, relied upon the case law of Supreme Court in the case of East India Commercial Co. Ltd., Calcutta Vs. CC, Calcutta [1983 (13) ELT 1342 (S.C.)] However, it is observed that this case law was delivered by Apex Court with respect to Section 167 (8) of the Sea Customs Act, 1878 which is equivalent to Section 111 (d) 111 (c) of the Customs Act, 1962 where violation of a condition of the license was being examined. It is in this context Apex Court held that customs has no case to take action under the Sea Customs Act, 1878 when the License ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meet the export 14) In the present case, advance licence was issued to the assessee in terms of para 7.4 of the EXIM Policy 1997-2000. It was in terms of this licence that the import of the specified material was permitted on the condition that the assessee is obligated to meet the export obligation as contained in the licence issued by the DGFT. No doubt, this obligation in the export licence, read with conditions contained in Notification No. 30/1997, puts the onus upon the assessee to make the exports of the products produced from the material so imported. However, it is the case of the assessee that for certain bona fide reasons (as the bona fides of the assessee have been accepted by the DGFT), as the assessee was not able to export same very goods produced by it from the material imported on which he was given exemption from payment of the import duty, the DGFT allowed the assessee to meet the export obligation through third party. 15) It is also correct that insofar as DGFT is concerned, it has passed Order-in-Original dated 03.08.2011 holding that the export through third party would tantamount to fulfilling the export obligation contained in the licence. However, sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xx xx xx (o) any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer. 8. Section 111(O) states that when goods are exempted from customs duty subject to a condition and the condition is not observed, the goods are liable to confiscation. The case of the respondents is that the goods imported by the appellants, which availed of the said exemption subject to the condition that they would not be sold, loaned, transferred or disposed of in any other manner, had been disposed of by the appellants. The Customs authorities, therefore, clearly had the power to take action under the provisions of Section 111(o). 9. We do not find in the provisions of the Import and Export Policy or the Handbook of Procedures issued by the Ministry of Commerce, Government of India, anything that even remotely suggests that the aforesaid power of the Customs authorities had been taken away or abridged or that an investigation into such alleged breach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is true that the terms of the said exemption notification were made part of the appellants licenses and, in that sense, a breach of the terms of the said exemption notification is also a breach of the terms of the license, entitling the licensing authority to investigate. But the breach is not only of the terms of the license; it is also a breach of the condition in the exemption notification upon which the appellants obtained exemption from payment of customs duty and, therefore, the terms of Section 111 (o) enable the Customs authorities to investigate. 8. The ratio laid by the Apex Court in the above case law is squarely applicable to the facts involved in the present proceedings in as much as the conditions contained in exemption notification No. 40/2006-CUS dated 1/5/2006 have to be fulfilled to the satisfaction of the Customs authorities and if these conditions are not satisfied then action can be taken by the Customs authority for demanding duty even if Licensing authority has not taken any action with respect to DFIA Licenses. One of the conditions of the exemption notification No. 40/2006-CUS dated 1/5/2006, read with EXIM Policy, is that duty free yarn import is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Therefore, according to him, if no fraud or collusion is found on the part of the appellant, in that event, the appellant would be entitled to the benefit of the DEPB licences /scrips. Relying on the decision in United India Insurance Company V. Lehru, (2003) 3SCC 338, Dr. Pal contends that it is just not possible for the appellant to verify the DEPB licenses/scrips which is otherwise saleable, negotiable and available in the market and which the appellant had purchased bona fide for valuable consideration and utilized it for availing of the credit against its own import, stands in the same footing as a driving licence of the driver of the vehicle as it stood in the said case. Therefore, this is an important question of law that whether in the absence of any proof of collusion or fraud or absence of bona fide on the part of the appellant, the appellant could be deprived of the credit of the DEPB licences/scrips purchased by him bona fide for valuable consideration since found to be forged. 4. The DEPB licence/scrip is admittedly a negotiable one and is available in the market. Anyone can purchase it from the market and avail of the credit out of it. This was so done by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been held by Apex Court as follows: [Order] The only question in the present appeals is as to whether the customs authorities could invoke the provisions of proviso to Section 28 of the Customs Act, 1962, to avail the benefit of extended period of limitation. 2. In the facts of the present case we find that the original licence holder, namely, Indian Card, Clothings Company Limited had deliberately suppressed the fact of having availed Modvat credit under Rule 57A of the Central Excise Rules, 1944, and made willfully wrong declaration to the licensing authority to obtain the endorsement of transferability of the same while transferring the licenses to the appellant herein. In view thereof, the extended period of limitation would be available to the authorities for the purpose of claiming the duty even against the appellant herein, who is the transferee of the licence in question. 9.2 In view of the above observations and settled proposition of law, it is held that demands against the appellants are not time barred. 10. So far as the argument of Shri S.K. Mehta (Advocate), with respect to on Section 28AAA (1) of the Customs Act is concerned, it is releva ..... X X X X Extracts X X X X X X X X Extracts X X X X
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