Custom, Excise & Service Tax Tribunal
Commissioner Of Customs ... vs M/S Kedia Overseas Ltd on 22 December, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
BANGALORE
Final Order No. 22416 / 2014
Appeal(s) Involved:
C/3197/2011-SM
[Arising out of the Order-in-Appeal No. 05/2011 (V.II) Cus dated 29/09/2011 passed by Commissioner of Customs, Central Excise & Service Tax (Appeals), Visakhapatnam]
Commissioner of Customs VISAKHAPATNAM-II
CENTRAL EXCISE BUILDING,
PORT AREA,
VISAKHAPATNAM - 530035 Appellant(s)
Versus
M/s KEDIA OVERSEAS LTD
PLOT NO.48, SRI KRUPA MARKET, MEHBOOB MANSION,
MALAKPET, HYDERABAD (A.P.) Respondent(s)
Appearance:
Mr. Pakshi Rajan, A.R.
For the Appellant
None For the Respondent
CORAM :
HON'BLE SHRI B.S.V. MURTHY, TECHNICAL MEMBER
________________________________________
Date of Hearing: 22/12/2014 Date of Decision: 22/12/2014
Assessee-Respondent had utilized one DEPB licence No. 02100040533 dated 24.10.2002 pertaining to M/s Sneha Enterprises (Exporter), Kolkata which was sold / transferred to them by M/s Adarsh Impex, Kolkata through M/s PD Enterprises, Hyderabad who was broker/agent based at Hyderabad. The above said license was used for imports through Kakinada by the respondent. A show-cause notice was issued to the respondent demanding payment of duty amount of Rs. 6,85,945/- alleged to be inadmissible DEPB credit on the ground that the said license was procured by M/s Sneha Enterprises fraudulently by misrepresenting the facts. The respondent has denied any knowledge of the fraudulent activities of the said exporter; that the DEPB licences were purchased from a mediator and the same were duly verified by Revenue and found to be genuine. The Revenue has demanded payment of Customs duty with applicable interest in addition penalty was imposed on the respondent under the provisions of the Customs Act, 1962.
2. Nobody is present on behalf of the respondent.
3. Learned Commissioner (Appeals) in the impugned order allowed the appeal filed by the respondent against the Order-in-Original wherein the appellant was required to deposit the Customs duty which was paid by utilizing the DEPB scrips / licence. He has taken this view on the basis of the observations in paragraph 5.4 which is reproduced for better appreciation :
5.4 Now, coming to the law laid down by the various judicial fora in this regard, I find that the law in this regard is fairly settled by the pronouncement of the Honble CESTAT, New Delhi, in the case of M/s Flexo Polymers vs. C.C., Amritsar, as reported in 2008 (223) ELT 553 (Tri.-Del). In this case, Honble CESTAT held that the appellants were bona fide purchaser of DEPB scrips, which were not forged but were obtained on the basis of forged documents by their seller and hence DEPB benefits not deniable to the appellant-importer as DEPB scrips were ab initio not non est. I hold that the law in this regard is fairly crystallized due to this pronouncements of the Honble High Court of Punjab and Haryana in the case of CC, Amritsar vs. M/s Leader Valves Ltd. and that of the Honble High Court of Calcutta in the case of M/s ICI India Ltd. vs. Commissioner, Customs (Port), Calcutta and crystallized the fine distinction and the treatment in the hands of law thereof, inasmuch as the bona fide purchaser of a DEPB scrip not est ab initio and was held not liable in the event of the scrip, later on, found to be obtained using fraudulent means, as in the case of M/s Leader Valves. It was held that the situation is different if the said scrip is est ab initio as in the case of a forged DEPB scrip where even the purchaser of such scrip could not have any relief. As already arrived at above, in the instant case, the appellants are bonafide purchasers of the DEPB scrip in question from the open market and hence the situation in this case is akin to the facts of the case in C.C., Amritsar vs. M/s Leader Valves Ltd; and C.C., Amritsar vs. M/s Vallabh Design Products, 2007 (219) ELT 73 (P&H) and M/s Flexo Polymers Ltd. vs. CC, Amritsar. Hence, I find that application of the ratio of the said decisions renders the order of the Addl. Commissioner dated 18.4.2011 non-maintainable. In view of the foregoing, I pass the following order.
ORDER
The appeal is allowed and the impugned order is set aside.
4. It can be seen from the above that the observations of the Commissioner (Appeals) came because of the stand taken by him that bona fide purchasers of the DEPB scrips from the open market are in similar situation as in the case of M/s Leader Valves Ltd. (supra). However, I find in the Appeal Memorandum, the Revenue has relied upon the decisions subsequent to the decisions cited by learned Commissioner (Appeals).
4. In the case of M/s Friends Trading Co. [2011 (267) E.L.T. 33 (P&H), Honble High Court of Punjab & Haryana considered the issue and observations of Honble High Court contained in paragraphs 8 & 9 are relevant and are reproduced below :
8. Learned counsel for the appellant submitted that even where DEPB scrip is forged and obtained fraudulently, resulting in wrongful availment of benefit of import duty and loss to public revenue, extended period of limitation could not be invoked in absence of finding of suppression or mis-statement by the importer who is successor of holder of such document. Distinction must be made between a document which is non-existent and fraudulent and a document which has not been genuinely obtained by complying with the requisite conditions.
9. We are unable to accept the submission. Finding recorded by the Tribunal, reproduced above, shows that action of the petitioner was not bona fide. In any case, the proviso is not limited to action of an importer who comes forward to take advantage on the basis of fraudulently obtained or forged DEPB, it also covers action of the predecessor of the importer. Importer who steps into the shoes of seller of forged document does not stand on better footing and cannot be allowed to retain benefit illegally obtained. Taint attaching to the document on the basis of which benefit is taken is not washed of. Fraud or suppression continues if document is not genuine. Any other interpretation will defeat the intendment of the proviso to Section 28 and will enable fraud to be perpetuated without any remedy. Even if case of criminal liability or penalty may stand on different footing, purchaser or successor of fraudulently obtained DEPB stands in the same position as his predecessor. If the extended period of limitation could be invoked against the original holder of fraudulent or forged DEPB, the same could be invoked against successor or purchaser. The judgments relied upon on behalf of the petitioner are distinguishable. The matter is covered by view taken by this Court earlier which has been followed by the Tribunal. Thus, we are unable to hold that any substantial question of law arises. The Honble High Court also considered the decisions in the case of M/s Leader Valves Ltd. (supra) and M/s Vallabh Design Products (supra) while coming to the conclusion and distinguished these decisions. Since the Commissioner (Appeals) has relied upon these decisions to come to the conclusion and distinguished and contrary view taken by Honble High Court, it is necessary to follow the decision of the Honble High Court. In view of the above, following the precedent decision of Honble High Court of Punjab & Haryana in the case of M/s Friends Trading Co. (supra), the appeal filed by the Revenue has to be allowed and is allowed.
(Operative portion of the order has been pronounced in open court) (B.S.V. MURTHY) TECHNICAL MEMBER /vc/