Custom, Excise & Service Tax Tribunal
Cc, Amritsar vs M/S Gopi Chand Krishan Kumar Bhatia on 20 March, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 20/03/2013. DATE OF DECISION : 20/03/2013. Customs Appeal No. 262 of 2008 [Arising out of the Order-in-Appeal No. 06/Cus/Appl/Ldh/2008 dated 11/01/2008 passed by The Commissioner (Appeals), Customs & Central Excise, Jalandhar.] For Approval and signature : Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri Rakesh Kumar, Member (Technical) 1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? CC, Amritsar Appellant Versus M/s Gopi Chand Krishan Kumar Bhatia Respondent
Appearance Shri Nagesh Pathak, Authorized Representative (DR) for the appellant.
None for the Respondent.
CORAM : Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri Rakesh Kumar, Member (Technical) Final Order No. 56045/2013 Dated : 20/03/2013 Per. Rakesh Kumar :-
The respondent had imported some goods against DEPB licence obtained by them on transfer from M/s Amber Exports and cleared the same under Bill of entry No. 2270 dated 31/3/2000. The transferable DEPB scrip had been issued on 15/9/2000. Subsequently, it was found that the DEPB licence had been issued by the Licencing Authority against misrepresenting/forged documents produced by the exporter and the DEPB scrip was subsequently cancelled ab-initio vide DGFT order dated 7/12/04. However, before cancellation of the DEPB scrip, the respondent had made duty free import against the same. The Jurisdictional Additional Commissioner confirmed the duty demand of Rs. 54,932/- alongwith interest against the respondent and beside this, also imposed redemption fine of Rs. 25,000/- as the goods were not available for confiscation. On appeal being filed to the Commissioner (Appeals), the Commissioner (Appeals) by the impugned order, following the judgment of Honble Punjab & Haryana High Court in the case of CC vs. Leader Valves Ltd. reported in 2007 (218) E.L.T. 349 (P&H) set aside the Additional Commissioners order. In respect of redemption fine, he also followed the Apex Courts judgment in the case of Weston Components Ltd. vs. CC, New Delhi reported in 2000 (115) E.L.T. 278 (S.C.), wherein it had been held that redemption fine can be demanded when the goods had been released against bond/undertaking, while in this case the goods had been unconditionally released without any bond or undertaking. Against this order of the Commissioner (Appeals), this appeal has been filed by the Revenue.
2. None appeared for the respondent.
3. Heard Shri Nagesh Pathak, learned DR, who pleaded that since the DEPB scrip against which the duty free import had been made by the respondent, had been obtained by fraud, the respondent cannot get the benefit of duty free import in as much as the DEPB scrip had been cancelled. He, therefore, pleaded that the impugned order setting aside the duty demand and confiscation of redemption fine is not sustainable.
4. We have heard learned DR and perused the record.
5. We find that in this case the originally the DEPB scrip had been issued by the Licencing Authority to M/s Amber Export, part of which had been transferred to the respondent, against which the respondent had made duty free import. The DEPB scrip was cancelled only after the import had been affected. It is not the case of the Revenue that the respondent were also a party to the fraud committed by the exporter M/s Amber Exports, as there is no allegation that the respondent had knowledge about obtaining of DEPB scrip by M/s Amber Export by fraud or mis-representation. In view of these circumstances, we are of the view that the issue involved in this case is squarely covered by Larger Bench of the Tribunal in the case of Hico Enterprises vs. CC, Mumbai reported in 2005 (189) E.L.T. 135 (Tri. LB), which had been upheld by the Apex Court vide judgment reported in 2008 (228) E.L.T. 161 (S.C.).
6. Tribunals judgment in case of ICI India Ltd. reported in 2003 (151) E.L.T. 336 (Tri. Del.), relied upon in the Revenues appeal is not applicable to the facts of this case as this is not a case where the DEPB scrip were fake or forged. In this case, the DEPB scrip had been issued by the Licensing authority, though against misrepresentation and production of forged documents by the exporter.
7. Judgment of Honble Punjab & Haryana High Court in case of Golden Tools International reported in 2006 (199) E.LT. 213 (P&H) is not applicable to this case, as in this case, what the Honble High Court has upheld is imposition of penalty on the Exporter M/s Golden Tools International under Foreign Trade (Development & Regulation) Act, 1992 for obtaining DEPB scrip by producing forged documents. The question as to whether a bonafide transferee not having any knowledge about the DEPB scrip having been obtained by fraud, could make duty free imports against the DEPB scrip, prior to its cancellation by the DGFT, was not before the Honble High Court. This question was considered by Honble High Court in the case of CC vs. Leader Valves Ltd. (supra) and the ratio of that judgment is in favour of the respondent.
8. In the background of the facts that -
(a) DEPB scrip/license had been actually issued by DGFT, though against mis-representation and forged papers produced by the exporter ;
(b) there is neither allegation nor evidence that the respondent was aware of the fraud committed by the exporter M/s Amber Exports at the time of making imports ; and
(c) at the time of import, in March 2000, the DEPB scrip was valid as the same was cancelled only on 7/12/04 ;
the principle that fraud nullifies everything would not be applicable to the Respondent, as -
(i) issue of DEPB scrip to an exporter by DGFT against certain stipulated export performance is like an agreement in the nature of grant and when the DEPB scrip has been issued against forged papers produced or mis-representation by the Exporter, the agreement would be a voidable agreement and the DEPB scrip would be valid till it is cancelled;
(ii) In terms of Apex Courts judgment in case of Vikas Sale Corporation reported in [1996] 102 STC 106 and judgment of Honble Delhi High Court in case of Philco Exports vs. STO reported in (2001) 124 STC 503 (Cal.), REP license and DEPB scrip are goods attracting sales tax on their transfer on sale;
(iii) in this case, when the respondent had obtained the DEPB scrip from M/s Amber Exports on transfer and at the time of its use for duty free imports, he was not aware of the fraud committed by the seller/transferor M/s Amber Exports, it is the provisions of Section 29 of the Sales of Goods Act readwith Section 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 vs. CC, Mumbai (supra) (para 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 bonafide 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.
8.1 The cases like the present case are governed by the principles laid down in the Apex Courts judgments in cases of East India Commercial (supra), and Collector vs. Sneha Sales Corporation reported in 2000 (121) E.L.T. 577 (S.C.) and Honble Punjab & Haryana High Courts judgment in case of Leader Valves Ltd. (supra). Though a coordinate bench of the Tribunal in case of Friends Trading Co. reported in 2011 (267) E.L.T. 57 (Tri. Del.) has taken a contrary view on this issue, in that judgment the distinction between void licence and voidable licence has not been considered.
9. In view of the above discussion, we do not find any merit in the Revenues Appeal. The same is dismissed.
(Dictated and pronounced in open court) (Archana Wadhwa) Member (Judicial) (Rakesh Kumar) Member (Technical) PK ??
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