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TMI Blog2016 (9) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... nts, to which the appellant was not a party - duty not demanded from the buyer - appeal allowed - decided in favor of appellant. - CUSAP No. 13 of 2014 (O&M) - - - Dated:- 7-9-2016 - Rajesh Bindal And Harinder Singh Sidhu, JJ. Mr. Jagmohan Bansal, Advocate for the appellant Mr. Sharan Sethi, Advocate, Mr. Amit Goyal for the respondent ORDER Rajesh Bindal J. 1. This order will dispose of two appeals bearing CUSAP Nos. 13 and 14 of 2014, as common questions of law and facts are involved. 2. However, the facts have been extracted from CUSAP No. 13 of 2014. 3. The assessee is in appeal against the order dated 21.10.2013 passed in Appeal No. 619 of 2006-Cus., by Customs, Excise Service Tax Appellate Tribunal, New Delhi (for short, 'the Tribunal') raising the following substantial questions of law: (a) Whether duty can be demanded from an importer who is not a party to fraud committed by an exporter ? (b) Whether demand against the appellant is sustainable when demand against identically situated persons has already been dropped ? (c) Whether extended period of limitation can be invoked, in view of various judgments of this Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2008 (228) ELT 161 (SC), this court in Commissioner of Customs, Amritsar v. Vallabh Design Products, 2007 (219) ELT 73 (P H); Commissioner of Customs v. Leader Valves Ltd., 2007 (218) ELT 349 (P H), CUSAP No. 23 of 2006-Commissioner of Customs, Amritsar v. Fertichem India, decided on 27.1.2009; CUSAP No. 4 of 2009-Commissioner of Customs (Preventive) Amritsar v. M/s Deebee Marketing Pvt. Ltd., decided on 21.4.2009 and M/s Gheru Lal Bal Chand v. State of Haryana and another, 2011(4) PLR 440, it was submitted that in case the benefit under DEPB purchased by a person for consideration had been utilised before it was cancelled, the importer cannot be made liable for any action. Action can be taken against the person who committed fraud. He further submitted that in the case of the appellant, DEPB itself was not a forged document. He further submitted that even the larger Bench of the Tribunal in Binani Cement Ltd. v. Commissioner of Customs, Kandla, 2010 (259) ELT 247 (Tri.-Ahmd.) held the same opinion. 6. On the other hand, learned counsel for the respondent, while referring to a Division Bench judgment of this Court in Friends Trading Co. v. Union of India, 2011 (267) ELT 33 (P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tting aside the penalty, recorded the following findings: As regards to imposition of penalty of ₹ 4,85,453/- and ₹ 30,000/- on the appellant No. 1 and 2 under Section 114A and Section 112 of the Act respectively, I find that there is nothing on record to prove in any way that they have abetted or connived with the exporters to fraudulent obtain the DEPB scrips. However, it is on record that the appellants had purchased the freely transferable DEPB scrips in the bona fide manner and utilised the same towards exemption of duty. 9. The appellant filed further appeal before the Tribunal. Even the revenue also preferred appeal against the order passed by the Commissioner (Appeals). One Member of the Tribunal opined that the appeals were liable to be dismissed applying the principle of buyer be ware . However, another Member opined that the appeal filed by the assessee was required to be allowed, whereas the revenue's appeal was meritless. The matter was referred to be considered by third Member on difference of opinion. After the matter was considered by third Member, the appeal filed by the appellant as well as the department were rejected. The department w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these circumstances, the maxim caveat emptor was applied. In cases, where scrip itself is forged, the fact could be found out in case the buyer seeks to verify this from the office issuing the scrip. However, it is not possible in a case where the scrip is genuine, but for the purpose of issuance thereof, the party concerned may have used some forged documents. 15. A similar issue was considered by a Division Bench of this Court in M/s Gheru Lal Bal Chand's case (supra). It was a case, where under Haryana Value Added Tax Act, 2003, a purchasing dealer is entitled to get input tax credit on production of a statutory form. The claim was sought to be denied by the department while holding that the statement made in the form was not correct as the selling dealer had not paid the tax, for which the certificate was issued. This court opined that liability can be fastened on a person, who either acts fraudulently or is a party to the collusion or connivance with the offender. Genuineness of the certificate can be examined by the authority. In case of falsity, action should be taken against the selling dealers, except in the case of plea of fraud, collusion or connivance between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vent where fraud, collusion or connivance is established between the registered purchasing dealer or the immediate preceding selling registered dealer or any of the predecessors selling registered dealer, the benefit contained in Form VAT C-4 would not be available to the registered purchasing dealer. The aforesaid interpretation would result in achieving the purpose of the rule which is to make the object of the provisions of the Act workable, i.e., realization of tax by the revenue by legitimate methods. 16. In the case in hand, as has already been noticed above, there is a specific finding recorded by the first appellate authority and even by the Tribunal that the appellant was not party to the fraud with the seller of DEPB. DEPB was found to be a genuine document, though obtained by seller by producing some forged documents, to which the appellant was not a party. 17. In view of our aforesaid discussion, we find merit in the present appeals. The same are allowed. First substantial question, as referred to in para No. 3 is answered in favour of the assessee and against the revenue and as a consequence, there is no requirement to deal with other questions. - - TaxTMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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