Custom, Excise & Service Tax Tribunal
) Dow Agrosciences India Pvt. Ltd vs Commissioner Of Customs, Mumbai on 16 May, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL Nos. C/19/03 & C/85/03 (Arising out of Order-in-Original No. 396/2002/CAC/CC/NRN dated 31.10.2002 passed by Commissioner of Customs (Adjudication), Mumbai) For approval and signature: Honble Mr. P.G. Chacko, Member (Judicial) and Honble Mr. S.K. Gaule, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== 1) Dow Agrosciences India Pvt. Ltd. Appellant (formerly, De-Nocil Crop Protection Pvt. Ltd.) 2) P.K. Srinivas Vs. Commissioner of Customs, Mumbai Respondent Appearance:
S/Shri Prakash Shah, J.H. Motwani and Prasad Paranjpe, Advocates for appellant Shri A.K. Prasad, Authorised Representative (JCDR), for respondent CORAM:
Honble Mr. P.G. Chacko, Member (Judicial) and Honble Mr. S.K. Gaule, Member (Technical) Dates of Hearing: 3rd & 8th September and 18th November 2010 Date of Decision: 16.5.2011 ORDER NO Per: P.G. Chacko M/s. Dow Agrosciences India Private Limited, formerly known as De-Nocil Crop Protection Private Limited (De-Nocil, for short), appellant in the first appeal, had imported several consignments of chemicals during October-December 1998 and utilized DEPBs (Duty Exemption Pass Books) for their clearance at Customs in terms of Notification No.34/97-Cus. dated 7.4.1997 (as amended). The total value of the goods was Rs.3,41,33,774/- on which a total amount of Rs.1,09,70,956/- was debited in the DEPBs towards duty. The relevant particulars of the imports are tabulated hereunder:
Sr. No. Despn. of goods B/E No. & date (proportionate) Value Rs.
DEPB No. & date DEPB originally issued in the name of M/s.
Debits Rs.
1.
Symtet 474/ 03.11.98 25,37,471 3628020 14.10.98 Sipla Exports & Marketing 8,88,115
2. Diethyl Thiophosp-horyl Chloride 300051/ 24.11.98 10,15,203 3629067 02.11.98 Readymoney Exports 3,55,321
3. S.B.E. Tetrachloro pyridine 300111/ 27.11.98 15,33,657 3629067 2.11.98
- do -
5,36,780
4. Diethyl Thiophosp-horyl Chloride 301380/ 10.12.98 6,47,789 3627550 9.10.98 Vaibhav Sales 2,26,726
5.
- do -
300111/ 24.11.98 11,92,703 3628553 26.10.98
- do -
4,17,446
6.
- do -
300091/ 24.11.98 25,25,594 3607414 11.06.98
- do -
8,83,958
7.
- do -
1323/ 10.11.98
23,06,740
3607421 11.06.98
- do -
8,07,359
8.
- do -
1927/ 17.10.98
35,54,374
3625760 17.09.98
Gautam Enterprises
12,43,419
9.
- do -
301388/ 10.12.98
29,03,696
3630886 24.11.98
Jinture Impex
10,16,294
10.
- do -
1323/ 10.11.98
12,32,255
3608357 01.07.98
S. Kirti- Kumar
4,31,289
11.
- do -
3218/ 29.10.98
33,04,723
3607539 15.06.98
Ritlene Exports
10,66,514
12.
S.B.E. Tetrachloro pyridine
300111/ 27.11.98
10,91,688
3626967 30.09.98
S. Kirti- Kumar
3,82,091
13.
- do -
2620/ 19.11.98
17,94,306
3626967 30.09.98
- do -
6,28,007
14.
- do -
2620/ 19.11.98
20,22,969
3608357 01.07.98
- do -
7,08,039
15.
- do -
474/ 03.11.98
8,01,120
3607421 11.06.98
Vaibhav Sales
2,80,392
16.
- do -
473/ 03.11.98
1,728
3607538 15.06.98
Ritlene Exports
605
17.
- do -
2867/ 27.10.98
1,67,457
3607539 15.06.98
- do -
58,610
18.
- do -
2868/ 27.10.98
29,62,830
3607538 15.06.98
- do -
10,39,991
3,41,33,774.00 1,09,70,956/-
2. Based on intelligence about a racket involving forgery of export documents and marketing of the DEPBs obtained on the basis of such documents, the DRI launched investigations in December 1998. The suspects were interrogated and their premises were searched for incriminating documents. From the results of investigations, it appeared to the DRI that all the DEPBs mentioned in column (5) of the above table had been obtained by racketeers in the name of the firms mentioned in column (6) of the said table on the basis of forged Shipping Bills (SBs) and forged Bank Certificates of Export & Realisation (BCERs) without actual export of goods and that De-Nocil purchased the said DEPBs from the market through P.K. Srinivas (appellant in the 2nd appeal) and utilized the same for clearing the goods without payment of duty in terms of Notification No.34/97-Cus. On examination of documents (SBs, BCERs and Applications for DEPBs) collected from the office of the Joint Director-General of Foreign Trade (Jt. DGFT), DRIs investigators found in the SBs endorsements in the name of two officers of customs, S/Shri B.B. Vhatkar and Rajeev Kumar, both of whom later disowned the signatures appearing as theirs in the documents. On the basis of the results of DRIs investigations, 19 show-cause notices (SCNs) were issued on 16.2.1999 to De-Nocil by the Assistant Commissioner of Customs (Gr. IIA), Jawahar Customs House, Nhava Sheva, under Section 28(1) of the Customs Act in respect of the 19 consignments imported by them and cleared duty-free under Notification No.34/97-Cus. These SCNs, which were issued within the normal period of limitation prescribed under the said Section 28(1), alleged that the DEPBs used for clearance of the above consignments had been wrongly obtained on the basis of false declarations and fraudulent documents and that the credit entries shown therein had been allowed without any export of goods. The SCNs cited contravention of condition (ii) of Notification 34/97-Cus. and proposed to recover the duty not paid on the above consignments imported by De-Nocil. Interest on such duty was also demanded.
3. While the above SCNs were pending adjudication, DRI gathered further evidence by way of recording statements or further statements of some of the persons involved in the DEPB racket, obtaining inputs from the DGFTs Mumbai office etc., whereupon the modus operandi of the racketeers became clear and it was also found that all the DEPBs in question had been cancelled ab initio by the licensing authority (Dy. DGFT, Mumbai) during April-June 1999. Later the DRI issued SCN dated 5.10.2001 invoking caveat emptor principle and calling upon De-Nocil to show cause to the Commissioner of Customs (Adjudication), Mumbai, as to why:
(a) demand totalling Rs. 1,09,70,956/- raised vide 19 Less Charge Demand Show Cause Notices issued from time to time by Assistant Commissioner of Customs, Group IIA, Nhava Sheva, under section 28(1) of the Customs Act, 1962 as indicated in Para 65 above should not be confirmed;
(b) the goods imported valued at Rs. 3,41,33,774/- should not be held liable to confiscation under Sec. 111 (d) and Sec. 111 (o) of the Customs Act, 1962, However as the same are not available for confiscation, why suitable penalty should not be imposed on them under section 112 of the Customs Act, 1962 in lieu of confiscation;
(c) the deposit of Rs. 4,49,262/- made by them should not be adjusted towards their duty liabilities, as demanded vide 10 Less Charge Demand SCNs mentioned above;
(d) the interest due in terms of Section 28AB should not be demanded; and
(e) penalty should not be imposed on them under section 114A/Section 112 of the Customs Act, 1962 The SCN also required P.K. Srinivas and certain others to show cause why penalties should not be imposed on them under Section 112 of the Act. What made the DRI issue this SCN could be read in para (70) thereof thus:
This Show Cause Notice is issued to cover all the additional facts of the cases in addition to the facts covered in 19 less charge demand notices issued to M/s. De-Nocil Crop Protection Ltd., for importing consignments against DEPBs obtained by the racketeers on the basis of forged Shipping Bills and BRCs.
4. Contesting the demand of duty and other proposals raised in the above SCN, De-Nocil filed a reply through their advocate stating as follows:-
(a) They are bona fide purchasers of the DEPBs and have taken all reasonable care and diligence required of a prudent person. As it is not in dispute that the DEPBs were issued by the DGFT and were verified by the Bombay Customs House, it is not open to the department to allege that the DEPBs were obtained fraudulently on the basis of forged export documents (SBs and BCERs).
(b) As the duty liability on the imported raw materials was discharged on the basis of assessment of the Bills of Entry by the proper officer of Customs, there was no non-levy or short-levy of duty and, therefore, the provisions of Section 28 of the Customs Act were not invocable without setting aside the assessments. [In this connection, the Supreme Courts judgment in CCE vs. Flock (India) Pvt. Ltd. 2000 (120) ELT 285 (SC) was relied on.]
(c) When the goods were imported and the duty assessed was paid by utilizing DEPB credit, the DEPBs were valid and subsisting. The subsequent cancellation of the DEPBs by DGFT did not have retrospective effect. Therefore the demand of duty on the ground of cancellation of DEPBs is not sustainable.
(d) After the issuance of 19 SCNs demanding duty on imports made during October-December 1998, the SCN dated 5.10.2001 for confirming the demand of duty was issued without the sanction of law and, therefore, it should be considered as an independent proceeding under Section 28 of the Customs Act. This SCN was issued beyond the normal period of limitation without alleging against De-Nocil collusion, willful misstatement of facts or anything else required to invoke the extended period of limitation. Hence the demand of duty is barred by limitation.
(e) As the goods were not prohibited under the Customs Act or any other law and as any condition of Notification 34/97-Cus. was not violated by the importer, the goods are not liable to confiscation under clause (d) or (o) of Section 111 of the said Act and the importer cannot be penalized under Section 112 of the Act. Further, there can be no penalty on the importer under Section 114A of the Act where the demand of duty on them under Section 28 of the Act is not sustainable.
5. After hearing M/s. De-Nocil and Shri P.K. Srinivas, the Commissioner of Customs (Adj.) passed the impugned order (a) confirming against De-Nocil demand of duty of Rs.1,09,70,956/- under Section 28(2) of the Customs Act with interest thereon under Section 28AB of the Act; (b) appropriating their earlier deposit of Rs.4,49,262/- towards the demand of duty; (c) holding the goods liable to confiscation under Section 111(o) of the Act; (d) imposing penalty of Rs.1,09,70,956/- on De-Nocil under Section 114A of the Act; and (e) imposing penalties on other noticees (including penalty of Rs.10 lakhs on Shri P.K. Srinivas) under Section 112(a) of the Act.
6. When personal hearing in this case was concluded on 3.9.2010, the counsel for De-Nocil sought leave to file an application for amending the appellants name in the cause-title of the memo of appeal. Leave was granted. The application which was subsequently filed by De-Nocil was heard by the bench on 8.9.2010, on which date the bench also directed both sides to file argument notes (with specific reference to case law) in the appeal on or before 27.9.2010. Though the JCDR filed his written submissions on 27.9.2010, the advocates written submissions were filed only on 18.11.2010 with a request for condonation of delay. The delay was condoned on 18.11.2010. Final orders in the appeals were reserved.
7. The miscellaneous application of De-Nocil is for change of their name in the appeal to Dow Agrosciences India Private Limited and is supported by a copy of Fresh Certificate of Incorporation Consequent on Change of Name, dated 17.2.2005, issued by the Assistant Registrar of Companies, Maharashtra. The application stands allowed.
8. The learned counsel for De-Nocil has reiterated the contentions raised in the reply to SCN dated 5.10.2001 and has also cited a plethora of judicial decisions in support thereof. The learned JCDR has claimed support from a line of other judgments to the Revenues case made out in the said SCN and in the impugned order. We shall proceed to discuss the rival contentions, issuewise, in De-Nocils appeal.
9.0 Issue No.I: Whether, on account of ab initio cancellation of the DEPBs by the licensing authority, the appellant is liable to be deprived of the benefit of Notification No.34/97-Cus. dated 7.4.1997 and consequently to pay customs duty on the goods in question:
9.1 It is not in dispute that all the DEPBs in question were cancelled ab initio by the licensing authority on the ground that the documents (SBs and BCERs) on the basis of which the DEPBs had been issued were forged and fake. One of the contentions raised by De-Nocil is to the effect that as the cancellation of DEPB licences was without notice to them, it cannot affect their right qua bona fide purchaser. But they have not shown us any provision of law which obligates the licensing authority to put transferees of DEPB licence also to notice of a proposal for cancellation of the licence, nor has their counsel argued that the rule of natural justice requires the transferees also to be heard before cancellation of the licence. In any case, the fact remains that De-Nocil, who learnt at least from SCN dated 5.10.2001 that the DEPB licences had been cancelled ab initio by the licensing authority did not choose to challenge that authoritys order.
9.2 We have also examined the evidence gathered by DRI, which includes (i) statements (recorded under Section 108 of the Customs Act) of the persons who played various roles in forging SBs and BCERs and obtaining DEPB licences mostly in the name of non-existent firms from DGFTs office on the basis of the forged documents, (ii) documents such as DEPBs, SBs, BCERs and application forms for DEPBs collected from DGFTs office, (iii) customs verification reports regarding SBs and banks verification reports regarding BCERs, (iv) statements (under Section 108 ibid.) of customs officers who disowned the signatures appearing purportedly as theirs on the SBs, (v) statement (under Section 108 ibid.) of the Export Manager of M/s. APL India Pvt. Ltd. who stated that they had not handled the cargo mentioned in the SBs, and (vi) orders of the Deputy DGFT, Mumbai canceling the DEPB licences ab initio. It is significant to note that the appellant has not assailed the above evidence. The appellant has virtually acquiesced in the factual position that the DEPB licences used for duty-free clearance of the goods imported by them had been obtained by the original licensees by producing forged and fake SBs and BCERs without export of any goods and that the licences were cancelled ab initio by the licensing authority later. Their only contention is that, as bona fide purchasers of the DEPBs with no notice of the tainted character of the licences, they cannot be adversely affected by the post-import cancellation of the licences. Their argument is that the DEPBs were valid when used for duty-free clearance of the goods imported by them and that the subsequent cancellation of the DEPBs by the DGFT cannot be any ground for the department to demand the duty from them. Per contra, the respondent has invoked the caveat emptor rule to argue that it was for the importer, before using the DEPBs for duty-free clearance of the imported goods, to ensure that the DEPBs were perfectly valid and did not suffer from any sort of taint or other infirmity. The DEPBs were obtained on the basis of forged documents and were, therefore, vitiated by fraud. On this ground, they were cancelled ab initio by the licensing authority. In the circumstances, according to the learned JCDR, it cannot be said that the appellant used valid DEPBs for clearing the goods duty-free. Numerous judgments have been cited before us in support of the rival arguments, which we shall proceed to discuss.
CASE LAW CITED ON BEHALF OF THE APPELLANT:
9.3 In the case of Collector vs. Sneha Sales Corporation [2000 (121) ELT 577 (SC)], the said Corporation had imported in October 1986 two consignments of polyester filament yarn under four REP licences issued by the Chief Controller of Imports and Exports (CCIE). They were transferees of the licences. The goods were assessed under Section 17 of the Customs Act and allowed under Section 47 of the Act to be cleared for home consumption. Later on, in adjudication of a show-cause notice issued by the Directorate of Revenue Intelligence (DRI), the Collector of Customs, Bombay ordered absolute confiscation of the goods under clauses (d), (l), (m) and (p) of Section 111 of the Act read with Section 3(2) of the Imports and Exports (Control) Act, 1947 and imposed a penalty on the importer under Section 112(a) of the Customs Act. In his order, the Collector noted that the aforesaid licences had been cancelled ab initio by the licensing authority (CCIE) by order dated 18.12.1986 on the ground that the original licensee had obtained the licences fraudulently. He held that there was no licence in existence at the time of import and the goods had been imported in contravention of the provisions of the Imports and Exports (Control) Act and hence liable to be confiscated under clause (d) of Section 111 of the Customs Act. On certain other grounds, the Collector held the goods liable to confiscation under clauses (l), (m) and (p) of the Section also. In an appeal filed by the Corporation against his order, the Tribunal took the view that the cancellation of the licences did not have retrospective effect, and set aside the confiscation ordered under Section 111(d) of the Customs Act, following the Supreme Courts ruling in East India Commercial Company Ltd. vs. Collector [1983 (13) ELT 1342 (SC)] wherein it had been held that a licence obtained by fraud was only voidable and was good till it was avoided in the manner prescribed by law. The above view of the Tribunal was upheld by the Supreme Court as follows:-
In the aforementioned decision of this Court it has been clearly laid down that in a case where the licence is obtained by misrepresentation or fraud it is not rendered non est as a result of its cancellation so as to result in the goods that were imported on the basis of the said licences and being treated as goods imported without a licence in contravention of the order passed under Section 3 of the Import and Export Act that fraud or misrepresentation only renders a licence voidable and it becomes inoperative before it is cancelled. In the present case the licences were cancelled by order dated December 18, 1986 after the goods had been imported and cleared. The Tribunal was, therefore, right in holding that the import of the goods was not in contravention of the provisions of Import and Export Order, 1955 and Import and Export (Control) Act, 1947 and the goods were not liable to be confiscated on that basis under Section 111(d) of the Act. 9.4 In the case of Taparia Overseas (P) Ltd. vs. UOI [2003 (2) Bom. CR 7], the petitioners had acquired two REP licences dated 2.3.1987 from the original licensees, M/s. Suraj Textile Traders, New Delhi, who had obtained the licences from the CCIE as per Appendix 21 of the Import Export Policy, 1985-88 for import of polyester filament yarn. They had done so with notice to the CCIE. Subsequently, they imported three consignments of polyester filament yarn. Three bills of entry were filed on 12th and 13th July 1987 prior to the arrival of the shipments. The goods were unloaded at Bombay port in August 1987 and the same were inspected by Customs authorities on 26th August and 7th September 1987. Subsequently, the Customs authorities and the importer received copies of the CCIEs order dated 11th September 1987 suspending the operation of the licences under clause 9(3) of the Import and Export (Control) Order, 1955. In the wake of this development, the Customs authorities withheld clearance of the goods on the premise that the import was without valid licence, against which the party moved the High Court under Article 226 of the Constitution of India.
The licences in question, eventually, came to be cancelled by the CCIE by order dated 30.11.1987 in adjudication of a show-cause notice which had been issued to the original licensee on 11.9.1987.
The High Court, after considering the apex courts judgment in Sneha Sales Corporations case and the Kings Bench decision in Master vs. Miller [4 T.R. 320], held that the effect of fraud was not to render the transaction void ab initio but to render it voidable at the instance of the party defrauded and that the transaction continued to be valid until the said party decided to avoid it. It was also observed that the concept that fraud vitiates everything would not be applicable to the cases where the transaction of transfer of licence is for value without notice arising out of mercantile transactions governed by common law and not by provisions of any statute. On the facts of the case in hand, the High Court held:
In the instant cases when the goods were imported into India, and even when the bills of entry were filed, neither were the licences suspended nor the same cancelled. In all these case, bills of entry were filed by the petitioners well before the suspension and/or cancellation of the licences in question, thus the imports were made under valid licences, the goods could not be subjected to levy of customs duty in the peculiar facts and circumstances of the cases in hand. 9.5 In the case of Commissioner vs. Leader Valves Ltd. [2007 (218) ELT 349 (P&H)], the respondent had imported certain goods duty-free in terms of Notification No.34/97-Cus. by utilizing a DEPB scrip which had been transferred to them by the original licensee, M/s. Parker Industries for a consideration. Later the DEPB scrip/licence came to be cancelled by the licensing authority (Joint DGFT, Ludhiana) having found that the licence had been obtained by M/s. Parker Industries fraudulently by producing a forged BCER purported to have been issued by Punjab & Sind Bank. The Jt. DGFTs order was upheld, in appeal, by the Additional DGFT. The Commissioner of Customs noted these facts while adjudicating a show-cause notice issued to the respondent, and ordered recovery of duty from the respondent, held the goods liable to confiscation and imposed a penalty on M/s. Parker Industries. In an appeal filed by the assessee against the Commissioners order, the Tribunal held in their favour in view of the Honble Bombay High Courts decision in Taparia Overseas case. Thus the demand of duty came to be set aside. In appeal, the Honble High Court of Punjab & Haryana held as under:-
The assessee-respondent admittedly is not a party to the fraud. There are categorical finding that they had purchased DEPB from the open market in the bona-fide belief of its being genuine. They had paid full price and accordingly have availed the benefit. Merely because at a later stage, the DEPB has been found to be fabricated and fake on the basis of BCER, the assessee-respondent could not be deprived of the benefits which were legitimately available to them. It is also worth noticing that the assessee-respondent was never issued any show cause notice before cancelling the DEPB which was obtained by M/s Parker Industries and obviously the notice was also to be issued to them alone. A Special Leave Petition (SLP) filed by the Commissioner against the above decision of the High Court was dismissed by the Honble Supreme Court [2008 (227) ELT A29 (SC)] thus: The Special Leave Petition is dismissed both on the ground of delay as also on merits. 9.6 In the case of Ajay Kumar & Co. vs. Commissioner [2006 (2005) ELT 747 (Tri.-Del)], the assessee had utilised for duty-free import of goods in terms of Notification No.34/97-Cus., two DEPB scrips procured from M/s. Vivek Impex Pvt. Ltd. who had acquired the same from M/s. Parker Industries, the original licensees, who had obtained the scrips from the DGFT. After the licensing authority cancelled the DEPB scrips on the ground that the same had been obtained by M/s. Parker Industries fraudulently, the department initiated action under Section 28 of the Customs Act for recovery of duty from the assessee in respect of the goods imported by them. The assessee contended that they were bona fide purchasers of the DEPB scrips without notice of any fraud committed by the original licensee, that the scrips were valid when used for duty-free clearance of the imported goods and that the demand of duty raised after the normal period of limitation was liable to be dropped both on merits and on the ground of time-bar. The Commissioner rejected these contentions and confirmed the demand of duty against the assessee. An appeal filed by the assessee against the Commissioners order was allowed by the Tribunal following the Honble Bombay High Courts decision in Taparia Overseas case. The Honble P&H High Court dismissed the departments appeal filed against the Tribunals decision, and the Honble Supreme Court dismissed the Civil Appeal filed by the department against the High Courts order.
9.7 In the case of Hico Enterprises vs. Commissioner [2005 (189) ELT 135 (Tri.-LB)], the assessee had imported certain raw material under a Value-based Advance Licence procured from M/s. Amar Tara Exports who had obtained the licence from the DGFT. They cleared the raw material duty-free under Notification No.203/92-Cus. dated 19.5.1992 with obligation for export of their final product. In a show-cause notice issued later on to them, the department proposed to recover the duty forgone by alleging that condition v(a) of the above Notification (that no input stage credit shall have been obtained under Rule 56A or 57A of the Central Excise Rules, 1944 in respect of the goods that are exported towards discharge of export obligation) had been contravened. The demand of duty was contested by the assessee who asserted that they did not contravene the conditions of the Notification and were eligible for the exemption under the Notification as bona fide transferee of the licence. The Commissioner of Customs, however, confirmed the demand of duty and directed both the original licence-holder and the transferee to pay the duty with interest. His order was taken in appeal to the Tribunal. The matter eventually came to be considered by a larger bench which held that the transferee-importer has attained a good title to the licence and the endorsement of transferability cannot be held to be not valid in the hands of the importer who is a bona fide purchaser of the licence and that where transfer has been effected without notice, to the transferee, of alleged fraud, the concept of fraud vitiate everything is not applicable as licence was transferred for value arising out of importable transaction governed by any law. A Civil Appeal filed by the department against the Tribunals LB decision was dismissed by the Honble Supreme Court in Commissioner vs. Hico Enterprises [2008 (228) ELT 161 (SC)].
9.8 In the case of Commissioner vs. Vallabh Design Products [2007 (219) ELT 73 (P&H)], the assessee had imported goods without payment of duty in terms of Notification No.34/97-Cus. by making use of a DEPB scrip which was transferred to them by M/s. Parker Industries who had obtained it from the Joint DGFT fraudulently on the basis of forged BCERs. When the fraud came to light, the Jt. DGFT cancelled the DEPB. After noting this fact, the Commissioner of Customs ordered recovery of duty with interest from the importer and imposed a penalty on M/s. Parker Industries. He refrained from imposing penalty on the assessee in the absence of any evidence indicating that they colluded with the exporter or purchased the DEPB scrip otherwise than in a bona fide manner. An appeal filed by the assessee against the demand of duty was allowed by the Tribunal following the LB decision in Hico Enterprises case. An appeal filed by the department against the Tribunals order was dismissed by the Honble High Court (following its own earlier judgment in the case of Leader Valves Ltd.) holding thus:
The assessee-respondent admittedly is not a party to the fraud. There are categorical finding that it had purchased DEPB form the open market in the bona fide belief of its being genuine. The assessee-respondent had paid full price and accordingly had availed the benefit. 9.9. In the cases of Flexo Polymers Pvt. Ltd. vs. Commissioner [2008 (223) ELT 553 (Tri.-Del.)] and Paramount Steel Ltd. vs. Commissioner [2008 (223) ELT 593 (Tri.-Del.)], the adjudicating and first appellate authorities had demanded duty from the assessees in respect of the raw materials imported and cleared by them duty-free by using DEPB scrips which had been purchased from original licensees who had obtained the same fraudulently from the licensing authority. The assessees appeals against the demand of duty were allowed by the Tribunal following the High Courts judgments in Leader Valves case and Vallabh Design Products case.
9.10 In the case of Binani Cement Ltd. vs. Commissioner 2010 (259) ELT 247 (Tri.-Ahmd.), the assessee had used two DEPB scrips (which had been originally obtained by M/s. Sri Vishnu Merchants from the DGFT and were eventually purchased by the assessee from the market) for duty-free clearance of two consignments of steam coal in terms of Notification No.34/97-Cus. Subsequently, the DEPB scrips were cancelled ab initio and the IE Code of M/s. Sri Vishnu Merchants suspended by the licensing authority (Jt. DGFT). Later on, in adjudication of a show-cause notice issued by the department, the Commissioner of Customs confirmed demand of duty with interest thereon against the assessee and imposed penalties on other noticees including M/s. Sri Vishnu Merchants. In an appeal filed by the assessee against the demand of duty, the Tribunal, by a majority decision, set aside the demand of duty by following Hico Enterprises (vide supra), Sneha Sales Corporation (vide supra) and the Honble Gujarat High Courts judgment dated 10.7.2008 in Tax Appeal No.1592 of 2007 filed by M/s. Binani Cement Ltd. The majority view as expressed by Third Member reads:-
27. Admittedly, in the present case, the DEPB licence were cancelled long after the importer used the documents for clearance of coal. On the date of import, the licence, lawfully issued by the competent authority, were valid and operative. In other words, the imports were made under valid licences. Hence the emphasis placed on ab initio by the JCDR is inconsequential. Yet another case law cited by the learned counsel is on the question whether the rights of a bona fide purchaser of DEPB licence could be affected by its subsequent cancellation. Here again, the answer is against the Revenue and in favour of the importer vide Hico Enterprises (supra). In this context, it needs mention that M/s. Binani Cement Ltd. acted upon the DEPB licences believing that they were legally valid documents under which they could claim benefit. The Revenue also acted upon the transaction with the same belief. I am of the considered view that it is not open to the Revenue to say that the DEPB licences used by the importer were not legally valid documents at the time of the imports. 9.11 In the case of Commissioner vs. Jupiter Exports [2007 (213) ELT 641 (Bom.)], the Honble High Court held as follows:-
With regard to the issue as to whether a license issued by the D.G.F.T. is valid or not is an issue that has to be determined by the D.G.F.T. and not the Customs Authorities. It is now well settled that until the licenses are cancelled by the licensing authority they are deemed to be valid. The Honble Supreme Court in case of Titan Medical Systems Pvt. Ltd v. Collector of Customs, New Delhi, 2003 (151) E.L.T. 254 (S.C.) has held that once an advance licence was issued and not questioned by the licensing authority, the Customs authorities cannot refuse exemption on an allegation that there was no misrepresentation. If there was any misrepresentation, it was for the licensing authorities to take steps in that behalf. In the present case, the licensing authority sought to cancel the licenses, but in appeal, the order was set aside and remanded for de novo consideration. No further order has been passed thereafter. In the circumstances, till today the licenses are valid. Even if the license was subsequently cancelled, the Supreme Court in the case of Sampat Raj Duggar v. Union of India, 1992 (58) E.L.T. 163 (S.C.), following East India Commercial Co. Ltd. v. Collector, 1983 (13) E.L.T. 1342 (S.C.) = 1963 (3) SCR 338 has held that on the date of the import the goods were covered by a valid import license. The subsequent cancellation of a licence is of no relevance nor does it retrospectively render the import illegal. 9.12 In the case of Yasha Overseas & others vs. CST & others [(2008) 85 SCC 681], the Honble Supreme Court examined the features of the DEPB scheme and treated a DEPB scrip as goods, at par with REP licence, for purposes of sales tax laws.
CASE LAW CITED ON BEHALF OF THE REVENUE:
9.13. In the case of ICI India Limited vs. Commissioner [2005 (184) ELT 339 (Cal.)], the appellant had purchased DEPB scrips for valuable consideration and used the same for duty-free import of goods. After noticing that the scrips were forged and invalid, the department demanded duty on the goods imported by the appellant. The demand was contested by the appellant contending that they were not liable to pay the duty as they were not party to any fraud involved in the issue of the DEPB scrips and were bona fide purchasers of the scrips which were freely transferable and also verified, endorsed and signed by the Customs officer concerned. When this dispute eventually arose before the Tribunal, the demand of duty and interest thereon came to be upheld. In a subsequent appeal filed by the party against the Tribunals decision, the Honble High Court held:-
In this case, the document itself having been found to be forged whether there was collusion or fraud on the part of the appellant in the issue of the DEPB licences/scrips becomes absolutely immaterial and irrelevant since no credit can be derived from a forged DEPB. The credit is made available on the strength of a valid DEPB. If the DEPB is forged, then the same is non est and therefore, there is no valid DEPB. As such no credit can be derived thereunder. In such circumstances, one may defend his case that one may not be liable for collusion or fraud and exposed to other penalties therefor, but still then one would be liable to pay the duty and interest and for other statutory consequences which one cannot avoid. A SLP filed by the party against the above order of the High Court was dismissed by the Supreme Court vide 2005 (187) ELT A31 (SC).
9.14. In the case of Friends Trading Company vs. Commissioner [2006 (202) ELT 611 (Tri.-Del.)], M/s. Parker Industries had obtained transferable DEPB scrips from DGFT, which were successively transferred to M/s. Shyam International, M/s. Vivek Impex Pvt. Ltd. and M/s. Friends Trading Company (assessee) who ultimately used the scrips for duty-free import of goods in November, 2000. Later the licensing authority found that the DEPB scrips had been obtained by M/s. Parker Industries fraudulently by producing forged documents (Bank Certificates of Export and Realisation). By an order dated 16.1.2002, it cancelled the DEPB scrips ab initio. Subsequently, the Commissioner of Customs demanded duty on the imported goods in adjudication of a SCN issued to the assessee. His order was challenged before the Tribunal in an appeal filed by the assessee who relied on the apex courts judgments in the cases of East India Commercial Co. Ltd. and Sneha Sales Corporation and the High Courts decision in Taparia Overseas case. The Tribunal dismissed the assessees appeal by holding that any concession availed on such DEPB scrips remains null and void and would not acquire legal validity at any time. The assessees appeal against the Tribunals order was dismissed by the High Court vide Friends Trading Co. Ltd. vs. UOI [2010 (254) ELT 652 (P&H)] wherein the Honble High Court followed its own earlier decision in Munjal Showa Ltd. vs. Commissioner [2009 (246) ELT 18 (P&H)].
A SLP (No.10287/2009) filed by the assessee against the High Courts judgment and a Review Petition (No.2334/2009) filed by them against the order in SLP were dismissed by the Honble Supreme Court.
9.15 In the case of Munjal Showa Ltd. (supra), the High Court had dismissed the assessees appeal filed against the Tribunals order upholding the order of the Commissioner of Customs demanding duty with interest from the assessee. The Commissioner had held that the DEPB scrips used by the assessee (transferee of the scrips) for duty-free clearance of the goods imported by them were forged and hence ab initio void. The connected Transfer Release Advices (TRAs) were also found to be forged. The Commissioner had also held that the importer who claimed benefit on the basis of the forged DEPB scrips stood at par with the transferor and hence could not get the benefit.
The Honble High Court dismissing the importers appeal observed, inter alia, thus: It is settled principle of common law that a purchaser steps into the shoes of the seller and does not acquire better title than the seller. This principle has also been recognized under Section 27 of the Sale of Goods Act, 1932.
9.16 In the case of Golden Tools International vs Joint DGFT [2006 (199) ELT 213 (P&H)], the Honble High Court dismissed two writ petitions filed against the order passed by the Additional Director-General of Foreign Trade [appellate authority under the Foreign Trade (Development & Regulation) Act, 1992] upholding the order passed by the Assistant DGFT cancelling a DEPB ab initio under Section 9 (4) and levying penalty under Section 11 (2) of the said Act. The DEPB was cancelled on the ground that it had been obtained by the petitioner by producing forged documents (BCERs). The Honble High Court rejected the contention that cancellation of DEPB ab initio was not contemplated under Section 9 (4) of the Act particularly when the period of its validity was over. SLP No. 5472/2006 filed against the High Court's judgment was dismissed by the apex court by order dated 3.4.2006.
9.17 In the case of Aafloat Textiles (India) Ltd vs Commissioner [2006 (201) ELT 39 (Tri-Mum)], the appellant had imported nine consignments of gold and silver under Special Import Licences (SILs) purchased from brokers, and cleared the goods by availing exemption under Notification No. 117/94-Cus dated 27.4.1997. Subsequent investigations by the DRI revealed that no such licences had been issued by the Foreign Trade Development Officer (FTDO) and that the signature and security seal of the FTDO had been forged. Therefore, a show-cause notice was issued to the appellant under the proviso to Section 28 (1) of the Customs Act (a) demanding duty of Rs 6.69 crores by denying the benefit of the above Notification, (b) proposing to confiscate the goods and (c) also proposing to impose penalty. In adjudication of the show-cause notice, the Commissioner of Customs confirmed the demand of duty against the party and imposed equal amount of penalty on them. The Tribunal set aside the Commissioners order on the ground that the proviso to Section 28 (1) (extended period of limitation) and Section 114 A (penalty) of the Customs Act were not applicable to the case.
Civil Appeal filed by the department against the Tribunals decision was allowed by the Supreme Court in Commissioner vs Aafloat Textiles (I) Pvt Ltd [2009 (235) ELT 587 (SC)]. The court discussed various forms and features of fraud and its effects. It also examined the applicability of the maxim caveat emptor. The Honble Court held that as fraud was involved, the forged/fake SILs did not have existence in the eye of law and that the involvement of fraud was sufficient to extend the period of limitation.
9.18 The learned JCDR also quoted judicial authorities in support of his submission that the terms of Notification No. 34/97-Cus should be strictly construed. Examples:- para (16) of Rajasthan Spg & Wvg. Mills Ltd vs Collector [1995 (77) ELT 474 (S.C)] and para (11) of Sterlite Industries (I) Ltd vs TCAPL [ 2005 (189) ELT 266 (A.P)]. It was also urged that, in case of doubt or ambiguity, its benefit be given to the Revenue. Novopan India Ltd vs Collector [1994 (73) ELT 769 (S.C) was relied on in this connection. It was also argued that the provisions of the Notification could not be construed in a manner that encouraged defaulters and discouraged those who abided by the law. In this connection, reliance was placed on para (25) of the apex courts judgment in Corporation Bank vs Saraswati Abbaransala [2009 (233) ELT 3 (SC)].
9.19 In the case of Sterlite Industries (I) Ltd (vide supra), it was also held by the Honble High Court, on the facts of the case, that the equitable doctrine of promissory estoppel was not invocable against the Central Excise authorities in relation to the exemption claimed by the petitioner-company under Notification No. 108/95-CE dated 28.8.1995 (as amended) on the strength of the certificates issued by the respondent (TCAPL). The said Notification exempted from payment of BED and AED (GSI) all excisable goods when supplied to projects financed by the United Nations or an international organization and approved by the Government of India. Where the project was approved by the Government of India for implementation by a State Government, a certificate issued by the executive head of the Project Implementing Authority (TCAPL, in this case) and countersigned by the Principal Secretary to the State Government certifying that the goods were required for the execution of the project and that the project had been duly approved by the Government of India for implementation by the State Government, was required to be produced by the manufacturer to the Assistant Commissioner of Central Excise having jurisdiction over his factory. The certificates issued by TCAPL and produced by the petitioner before the Assistant Commissioner were to the effect that the materials supplied by the petitioner were intended for use in the implementation of a project financed by Japan Bank of International Co-operation (JBIC) and approved by the Government of India for implementation by the Government of Andhra Pradesh. These certificates, later on, came to be cancelled by TCAPL having noticed that JBIC was not an international organization for the purposes of the above Notification. The Honble High Court accepted the contention of the Senior Standing Counsel for Central Government that, as the certificates had been issued under a bona fide impression that JBIC was an international organization and were cancelled by TCAPL as soon as they learnt of the mistake, the doctrine of promissory estoppel was not attracted. The following are excerpts from the High Courts judgment:
19. The plea of promissory estoppel pressed against Excise authorities is misconceived. There is no material brought on record to establish that any promise was made by the Central Government or the Excise authorities with respect to the exemption of goods supplied by the petitioner to A.P. TRANSCO. The letter of Excise Superintendent relied upon by the petitioner cannot be construed as such representation by the Excise authorities. We are inclined to uphold the contention of the learned Standing Counsel for Central Government that the principle of estoppel based on the letter dated 08.01.2001 Annexure P13 is not attracted. The letter granting such permission by the Excise authorities is traceable to Rule 173(b) of the Excise Rules. Unless the petitioner satisfies the condition precedent for grant of exemption specified in Notification No. 108/95, the question of availing of exemption from payment of excise duty or additional excise duty in respect of the goods in question does not arise. 21. The petitioner having failed to establish its entitlement to the exemption in terms of the Exemption Notification, cannot press into effect the doctrine of promissory estoppel against the Central Government or the Excise authorities. 9.20 Commissioner vs. Pioma Industries & Imperial Soda Factory [1997 (91) ELT 527 (SC)], wherein a point of law, not raised before the Tribunal, was allowed to be raised before the Supreme Court, was cited by JCDR in the context of contending that the DEPBs used by De-Nocil were liable to be considered as fake and non est rather than as genuine documents obtained by the original licensees on the basis of forged shipping bills etc. This contention was raised when it was pointed out by the counsel for De-Nocil that none of the show-cause notices had alleged that the DEPBs themselves were forged or otherwise fake. JCDR also relied on Macnair Export (P) Ltd vs Commissioner [2002 (142) ELT 593 (Tri-Bang)] wherein it had been held that a jurisdictional objection could be raised at any stage of the proceedings. The Commissioners Civil Appeal against the decision was dismissed by the Supreme Court on the ground of delay as well as on merits vide 2003 (152) ELT A87 (SC).
9.21 In Sneh Exports vs Commissioner [2006 (202) ELT 7 (SC)] it was held that a situation contemplated under one statute cannot, in absence of any express or clear intendment, be made to apply or given effect to while applying the provisions of another statute. The learned JCDR cited this ruling of the apex court in support of his submission that Yasha Overseas (vide supra) was not relevant to De-Nocils case. He submitted that neither DEPB licence nor REP licence was goods under the Central Excise law unlike under the Sales Tax law. Also, the two licences were sought to be distinguished with reference to Section 111 of the Customs Act.
CASE LAW ON THE EFFECT OF DISMISSAL OF SLP 9.22 Both sides also cited case law on the effect of dismissal of Special Leave Petition (SLP) by the apex court. The learned counsel for the appellant relied on para (40) of Kunhayammed vs State of Kerala [2001 (129) ELT 11 (SC)] and para (22) of Pernod Ricard India (P) Ltd vs Commissioner [2010 (256) ELT 161 (SC)] and argued that the dismissal of SLP even on merits could not create a binding precedent under Article 141 of the Constitution. This argument was advanced in connection with his submission that the dismissal of SLP and Review Petition in the case of Friends Trading Co (vide supra) by the Supreme Court did not have the effect of upholding the High Courts judgment in that case. The learned JCDR, on his part, claimed support from Vikram Cement vs. Commissiner [2009 (242) ELT 545 (Tri.-Del.)] wherein it was held by the Tribunal that an order of dismissal of SLP by the apex court on the facts of the case was a speaking order having binding effect. He also referred to the Tribunals larger bench decision in Vandana Global Ltd. vs. Commissioner [2010 (253) ELT 440 (Tri.-LB)] wherein Vikram Cement was upheld.
REJOINDER 9.23 In his rejoinder, the learned counsel relied in Commissioner vs Toyo Engineering India Ltd [2006 (201) ELT 513 (SC)] in support of his argument that the Revenue could not be allowed to raise before the Appellate Tribunal any new plea which had not been raised in the show-cause notices. It was pointed out that the learned JCDRs submission (vide para 9.20) that the DEPBs themselves were fake and non est was beyond the scope of the show-cause notices. The learned counsel reiterated that the DEPBs had been duly issued by the licensing authority and hence not fake. For this reason, some of the decisions relied on by the JCDR were claimed to be not applicable to this case.
DISCUSSION 9.24. All the DEPBs in question were issued, utilized and cancelled during the period of the Export & Import Policy (1-4-1997 to 31-3-2002) issued under the Foreign Trade (Development & Regulation) Act, 1992. Para 7.25 in Chapter 7 of the Policy described the DEPB scheme as follows:-
"The objective of Duty Entitlement Pass Book Scheme is to neutralize the incidence of basic customs duty on the import content of the export product. The neutralization shall be provided by way of grant of duty credit against the export product. The duty credit under the scheme shall be calculated by taking into account the deemed import content of the said export product as per Standard Input Output Norms and determine basic customs duty payable on such deemed imports. The value addition achieved by export of such product shall also be taken into account while determining the rate of duty credit under the scheme.
Under the Duty Entitlement Pass Book (DEPB) scheme, an exporter shall be eligible to claim credit as a specified percentage of f.o.b. value of exports made in freely convertible currency. The credit shall be available against such export products and at such rate as may be specified by the Director General of Foreign Trade by a Public Notice issued in this behalf.
Any item except those appearing in the Negative List of Imports shall be allowed for import without payment of basic customs duty, special duty of customs as well as additional duty of customs, against the credit under a Duty Entitlement Pass Book (DEPB). The holder of Duty Entitlement Pass Book (DEPB) shall have the option to pay additional customs duty, if any, in cash as well." [underlining supplied] Para 7.29 provided that "DEPB may be issued on (a) post-export basis and (b) pre-export basis". Para 7.30 explained that "DEPB on post-export basis shall be granted against exports already made". Para 7.32 provided as follows:-
"The DEPB on post-export basis and/or the items imported against it are freely transferable. The transfer of DEPB shall, however, be for import at the port specified in the DEPB which shall be the port from where exports have been made".
In the present case, "DEPBs on post-export basis" were obtained from the licensing authority under the FT(D&R) Act by racketeers (mostly in the name of non-existent and fictitious firms) by producing forged and fake Shipping Bills (SBs) without exporting any goods. "Transferability" was got endorsed on the DEPBs by the licensing authority, on the basis of forged and fake Bank Certificates of Export & Realisation (BCERs). These facts are not in dispute. In the absence of exports and realization of export proceeds, no credit of duty accrued "as a specified percentage of f.o.b. value of exports" to the allottees of the DEPBs and nothing rendered the DEPBs "transferable" in the eye of law. The DEPBs did not have any intrinsic value in the form of transferable credit of duty. The DEPBs and the transferability endorsed thereon ever stood vitiated by fraud. If the principle that no one can claim any benefit under a forged document is applicable to the original allottees, it should be held that they did not earn any credit of duty on the basis of the forged & fake SBs and BCERs. If that be so, when they transferred the tainted DEPBs to the appellant, no benefit in the form of credit of duty could have passed on to the latter.
9.25. The REP licences considered by the Hon'ble High Court in Taparia Overseas case did not require the licensing authority's endorsement for transferability under the Import & Export Policy (April 1985 - March 1988) issued under the FT(D&R) Act. We have perused Chapter XIV ("Import Policy For Registered Exporters") of the Policy; para 223 provided a scheme for duty-free import of raw materials against REP licences issued against exports of specified products, and also stated that REP licences issued under the scheme would be freely transferable and would not be subject to "actual user" condition. It was laid down in para 225 that, except for certain specified cases, a licence-holder could transfer the licence in full or part in favour of any other person. Para 226 provided as under:
"The transfer of the licence will not require any endorsement or permission from the licensing authority i.e., it will be governed by the ordinary law. Accordingly, clearance of the goods covered by an REP licence issued under this policy, will be allowed by the customs authorities on production, by the transferee, of only the document of transfer of the licence concerned in his name. Whenever an REP licence is transferred, the transferor should give a formal letter to the transferee, giving full particulars regarding number, date and value of the licence transferred and the name and address of the transferee, and complete description of the import items for which the licence is transferred.."
[underlining supplied] Now the relevant ruling of the Hon'ble High Court in Taparia Overseas is reproduced below:-
"the concept that fraud vitiates everything would not be applicable to the cases where the transaction of transfer of licence is for value without notice arising out of mercantile transactions governed by common law and not by provisions of any statute".
[underlining added] The transfer of REP licences in the case of Taparia Overseas was governed by common law as observed by the Hon'ble High Court and by ordinary law as per para 226 of the Import & Export Policy ibid. Indisputably, there is total harmony between the Policy provision and the court's ruling. A closer look at para 226 of the Policy would reveal as to why the transfer of REP licence was said to be "governed by the ordinary law" --- the licence was freely transferable as in an ordinary mercantile transaction without any endorsement or permission from the licensing authority. As per the Hon'ble High Court's ruling as we comprehend it, the concept of fraud vitiating everything is not applicable to such a transaction. But the concept is applicable where a transaction of transfer of licence is governed by provisions of any statute. This view, which is clearly discernible from the Hon'ble High Court's ruling, is applicable to the present case wherein admittedly the DEPBs were not transferable without the licensing authority's endorsement of transferability under the relevant provisions of the Exim Policy (1997-2002) issued under the FT(D&R) Act, 1992. Where such endorsement was statutorily required to make the DEPB scrips/licences transferable, it could only be said that the transaction of transfer of the scrips was governed by provisions of the statute viz. the FT(D&R) Act and the Exim Policy issued thereunder. The concept of fraud vitiating everything must, then, be applicable to such transaction. This concept was not applicable to the transfer of REP licences in the case of Taparia Overseas. The case of Sneha Sales Corporation is also similarly distinguishable.
9.26. The learned counsel argued that, as DEPB scrip was equated with REP licence by the Hon'ble Supreme Court in Yasha Overseas, decisions rendered in cases like Taparia Overseas and Sneha Sales Corporation involving duty-free import of goods by transferees of REP licences should be followed in the present case. The argument is not acceptable for the reason that the apex court was only treating DEPB scrip and REP licence as "goods" for purposes of Sales Tax laws. The court did not compare the two from the point of view discussed in para (9.25) above. As rightly submitted by the learned JCDR drawing support from the Hon'ble Supreme Court's decision in Sneh Exports, a situation contemplated under Sales Tax Act cannot, in the absence of any intendment, be given effect to while applying the provisions of the Customs Act or the Foreign Trade (Development & Regulation) Act.
9.27. In the present case, the DEPBs were cancelled ab initio by the licensing authority after the appellant utilized them for duty-free clearance of the imported goods in terms of Notification No. 34/97-Cus. In the case of Golden Tools International, the Hon'ble Punjab & Haryana High Court examined the scope of the power conferred on the licensing authority under Section 9(4) of the FT(D&R) Act, and held that the authority had power to cancel a licence whether unutilized or utilized. The Court held as under:
13. There is no substance in the plea that a DEPB cannot be cancelled after it had outlived its life. Sub-section (4) of Section 9 of the Act, confers upon the Director General or the authorized officer power to suspend or cancel any licence granted under the Act. Suspension is an interim measure, pending passing of a final order, but cancellation envisages annulment, a complete abolition of the right for the exercise of which a licence is granted. The power to suspend or cancel the licence vested in the Director General is determined by reference to the language used in the Statute and not by reference to any predictions about the legislative intent. We are unable to read into Section 9 (4) of the Act anything which could indicate that expression cancel means only revocation of a licence which is otherwise valid and operative and that too retrospectively. In our opinion, the power to cancel a licence includes cancellation of both, whether unutilized or utilized. [underlining supplied] The Assistant DGFT's order cancelling a DEPB ab initio under Section 9(4) ibid was upheld by the Hon'ble High Court. Of late, we have also come across a recent judgment of the Hon'ble Bombay High Court [Bhilwara Spinners Ltd. Vs. Union of India 2011 (267) ELT 49(Bom.)] holding that the DGFT has power to amend a licence retrospectively. One case cited by the learned counsel viz. Vikrant Overseas Vs. Union of India 2000 (123) ELT 486 (P&H), wherein contra view had been taken, has been distinguished in Bhilwara Spinners case. Therefore, in our view, the power of the licensing authority under Section 9(4) of the FT(D&R) Act to cancel a DEPB whether utilized or unutilized (i.e., ab initio) is indisputable. If that be so, the orders of the licensing authority (Deputy DGFT, Mumbai) cancelling ab initio the DEPBs which were utilized by De-Nocil for duty-free clearance of the goods imported by them had full effect in law with the result that customs duty equal to the DEPB credit which was utilized by them and cancelled by the licensing authority with retrospective effect became leviable on the said goods. As we have already indicated, the cancellation orders had attained finality vis-`-vis the appellant who did not choose to challenge those orders under the appellate provisions of the FT(D&R) Act.
9.28. The learned JCDR has argued that, as the SBs referred to in the Annexures to the DEPBs were forged, the DEPBs themselves were liable to be treated as forged. But there was no such allegation in the show-cause notices. The allegation was that the DEPBs were obtained by the original allottees by producing forged SBs and BCERs. Therefore, the Revenue cannot be heard to say that the DEPBs per se were forged. Whether a DEPB is forged is not a pure question of law to be allowed to be raised for the first time at this stage. This situation, however, cannot be decisive for the appellant. The learned counsel has contended that a DEPB issued on the basis of forged documents cannot be void ab initio but only voidable at the instance of the affected party and the same is valid till it is cancelled by the authority which issued it. He has also relied on case law on the point. But the question before us is significantly of a different hue and the same is whether any credit of duty can be said to have ever accrued to, or to have been earned by, the allottee of such DEPB which was obtained by producing forged SBs and BCERs. We repeat -- there was no export, no f.o.b. value, no realization of proceeds in the present case; hence no credit of any duty had accrued to the allottees of the DEPBs. Even if it is assumed that the DEPBs, though issued without actual accrual of duty credit to the allottees, vested the benefit in them artificially, the appellant cannot legitimately claim the benefit after its retrospective cancellation by the licensing authority which, as per the High Court's ruling in Golden Tools International, has the power under Section 9(4) of the FT(D&R) Act to cancel DEPB "credit" already "utilized". In our view, the distinction drawn by the learned counsel between a forged DEPB and a DEPB issued on the basis of forged documents is of no significance where the DEPB of the latter category is cancelled with retrospective effect by the authority which issued it. Both are incapable of vesting any credit of duty in the DEPB-holder so as to be used for purposes of Notification No. 34/97-Cus.
9.29. The contention of the appellant is that, as they had purchased the DEPBs bona fide for valuable consideration without notice of the transferors' fraud, they cannot be denied DEPB credit. Per contra, the Revenue has invoked the caveat emptor principle by pointing out that it was for the appellant to make sure that the original allottees (transferors) had actually earned transferable credits of duty by exporting goods and realizing proceeds, as the Exemption Notification itself clearly indicated that no credit could be earned without exports. We are inclined to accept this plea and hold that the above principle was rightly invoked in this case. In this manner only, fraud on the Revenue can be made actionable. Any different view will only perpetuate the menace of fraud on the Revenue and defeat the public interest. If the appellant's argument is accepted, the results will be catastrophic for the Revenue. In our view, it is to secure the revenue that the licensing authority under the FT(D&R) Act has been empowered to cancel DEPBs (whether utilized or unutilized) retrospectively. The rule of law demands that the orders issued under the said provision of law be given full effect to.
9.30. The facts of the case of Friends Trading Company [vide para (9.14) of this order] are similar to the facts of the present case. In that case, the High Court, following its own decision in the case of Munjal Showa Ltd. [vide para (9.15) of this order], held that the assessee (transferee of DEPB scrips which had been obtained by the original allottee by producing forged BCERs) was not entitled to the benefit of the DEPB scrips which were cancelled ab initio by the licensing authority after "utilization" of the scrips by the assessee for duty-free clearance of the goods imported by them. The assessee was held liable to pay the duty leviable on the goods. The SLP filed by the assessee was dismissed by the Supreme Court. A Review Petition filed by them was also dismissed by the Court by order dated 20.01.2010 which reads:
We have gone through the review petition and the relevant documents. There is delay in filing the review petition. In our opinion, no case for review of our order is made out both on the grounds of delay as well as on merits and accordingly the review petition is dismissed". [underlining supplied] Obviously, the above order was passed by the apex court after considering the records of the case. It was an order on merits. Therefore, presumably, the SLP had also been dismissed on merits. If that be so, the High Court's decision can be said to have been affirmed on merits by the Supreme Court. Of late, the same High Court has reaffirmed its view in another case of the same party vide Friends Trading Co. Vs. Union of India 2011 (267) ELT 33 (P&H). It is also pertinent to note that, in the case of Munjal Showa Ltd., and in both the cases of Friends Trading Company, the High Court has considered and distinguished many of the cases [East India Commercial Company, Sneha Sales Corporation, Taparia Overseas, Leader Valves, Vallabh Design Products, etc.] relied on by the counsel before us.
9.31. The cases of Hico Enterprises and Ajay Kumar & Co. decided by the Supreme Court are also distinguishable. The relevant paragraphs of the two judgments are quoted below:
Hico Enterprises: -
"It is seen that in view of the fact that in the show cause notice issued on 4-3-1999, there was no reference to the alleged infraction of M/s. Amar Taran Exports, the transferor of the license in question, the judgment of the CESTAT does not suffer from any infirmity to warrant interference. The appeal is dismissed." [underlining supplied] Ajay Kumar & Co:-
"It is seen that in view of the fact in the show cause notices, there was no reference to the alleged infraction of M/s. Parker Industries, the transferor of the license in question. The judgments of the CESTAT and the High Court do not suffer from any infirmity to warrant interference. It is to be noted that in Commissioner of Customs (Import) Bombay v. M/s. HICO Enterprises [2008 (11) SCC 720] similar view was taken. The appeal is dismissed." [underlining supplied] In De-Nocil's case, the show-cause dated 5.10.2001 clearly brought out the fraud committed by the transferors of DEPBs. It was clearly alleged in the show-cause notice that the Shipping Bills and Bank Certificates of Export & Realisation on the basis of which the DEPBs had been issued by Dy. DGFT, Mumbai were all forged. It was also alleged that most of the DEPBs had been obtained by the racketeers in the name of non-existent/fictitious firms. Even the transfer letters were also allegedly fabricated. These and allied allegations were raised against the transferors of the DEPBs. The appellant would only say that they were bona fide transferees of the DEPBs without notice of the above fraud committed by the transferors. Therefore, in our view, the appellant cannot claim support from the above judgments of the apex court.
9.32. Notification No. 34/97-Cus. exempted goods imported into India, from BCD and CVD subject to six conditions, the first three reading as follows:-
"(i) That the importer has been issued a Duty Entitlement Pass Book by the Licensing Authority in pursuance of paragraph 7.25 read with paragraph 7.29 of the Export and Import Policy (hereinafter referred to as said Duty Entitlement Pass Book).
(ii) The importer has been permitted credit entries in the said Duty Entitlement Pass Book at the rates notified by the Government of India in the Ministry of Commerce for the products exported or has been allowed a provisional credit in the said Duty Entitlement Pass Book by the Licensing authority to be set-off by the credits earned on exports to be subsequently effected;
(iii) The said Duty Entitlement Pass Book is produced before the proper officer of Customs for debit of the duties leviable on the goods but for exemption contained herein :
Provided that exemption from duty shall not be admissible if there is insufficient credit in the said Duty Entitlement Pass Book for debiting the duty leviable on the goods but for this exemption." [underlining supplied] The other conditions are not relevant to the context. It is clear from condition No.(ii) that an importer claiming exemption from payment of duty must have sufficient credit in the DEPB [issued on post-export basis] for the products exported or must earn sufficient credit from future exports so as to set off the provisional credit allowed in the DEPB [issued on pre-export basis] by the licensing authority. This condition, obviously, cannot work without actual exports. Where the importer uses the first kind of DEPB (i.e., the one issued on post-export basis) for duty-free clearance of the goods imported by him, he must, before doing so, make sure that the DEPB contains sufficient entries of duty credits earned from export of the product by the exporter. If there is no credit so earned from actual exports and entered in the DEPB, the importer fails to satisfy condition No. (ii) and cannot use the DEPB for duty-free clearance of his imports. In our view, the proviso to condition No. (iii) ibid should be construed harmoniously with this position. According to the said proviso, exemption from duty shall not be admissible if there is "insufficient credit" in the DEPB for debiting the duty normally leviable on the goods. This would mean that, where an importer wants to clear his imports without payment of duty by using a DEPB issued on post-export basis, he should ensure firstly that there is "credit" earned from exports and duly entered in the DEPB and secondly that the credit is "sufficient" for debiting the duty which is leviable on the goods but for the exemption. To our mind, in the present context, the word "sufficient" or "insufficient" will make sense only if it is used to qualify "credit earned from exports". In the instant case, as we have already found, the original allottees of the DEPBs had not earned any "credit" of duty in the absence of exports and, therefore, the appellant who purchased those DEPBs did not acquire any "credit", let alone sufficient, for duty-free clearance of their imports in terms of Notification 34/97-Cus. when strictly construed. It is trite law that an Exemption Notification requires to be strictly interpreted (vide Rajasthan Spinning & Weaving Mills, Sterlite Industries etc.) and the benefit of any doubt has to be given to the Revenue (vide Novopan India). Therefore, we hold that the appellant is not entitled to claim the benefit of the Notification. Issue No. I stands answered in the affirmative against the assessee.
10.0. Issue No. II: Whether it was open to the department to demand duty from the appellant under Section 28 of the Customs Act without successfully challenging the assessment by recourse to Section 129 D (2) of the Customs Act:
10.1. In the memo of appeal, the appellant has contended that, as the duty liability on the imported raw materials had been discharged under DEPB Scheme on the basis of assessment of the Bills of Entry by the proper officer of Customs, there is no question of non-levy or non-payment of duty and, therefore, the provisions of Section 28 of the Customs Act were not invocable without recourse to the statutory procedure of revision of assessment. This contention is not acceptable as it is contrary to binding case law viz UOI Vs. Jain Shudh Vanaspati Ltd. [1996(86) ELT 460 (SC)]. Para 5 of the Honble Supreme Courts judgment reads as follows:-
5.?It is patent that a show cause notice under the provisions of Section 28 for payment of Customs duties not levied or short-levied or erroneously refunded can be issued only subsequent to the clearance under Section 47 of the concerned goods. Further, Section 28 provides time limits for the issuance of the show cause notice thereunder commencing from the relevant date; relevant date is defined by sub-section (3) of Section 28 for the purpose of Section 28 to be the date on which the order for clearance of the goods has been made in a case where duty has not been levied; which is to say that the date upon which the permissible period begins to run is the date of the order under Section 47. The High Court was, therefore, in error in coming to the conclusion that no show cause notice under Section 28 could have been issued until and unless the order under Section 47 had been first revised under Section 130. . The above ruling of the apex court was followed by the Honble Madras High Court in the case of Venus Enterprises Vs. CC, Chennai [2006(199) ELT 405 (Mad.)] wherein the Honble High Court framed the following question of law:-
2. . ..
(1) Whether the Tribunal was right in holding that the order of assessment on which no Appeal was preferred, can be reopened by issue of a fresh Show Cause Notice under Section 28(1) of the Customs Act, in the light of the Apex Courts decision reported in 2004 (172) E.L.T. 145 (S.C.) in the case of Priya Blue Industries Ltd. v. CC ? The Honble High Court answered the above question in the affirmative in favour of the Revenue in para 6 of its judgment, which reads as under:-
6.?With regard to question No. l, the law is well settled that a show cause notice under the provisions of Section 28 of the Act for payment of customs duties not levied or short-levied or erroneously refunded can be issued only subsequent to the clearance of the goods under Section 47 of the Act vide Union of India v. Jain Shudh Vanaspati Ltd. [1996 (86) E.L.T. 460 (S.C.)]. Therefore, as rightly held by the Tribunal, if the contention of the appellants counsel that when the goods were already cleared, no demand notice can be issued under Section 28 of the Act is accepted, we will be rendering the words where any duty has been short-levied as found in Section 28(1) of the Act as unworkable and redundant, inasmuch as the jurisdiction of the authorities to issue notice under Section 28 of the Act with respect to the duty, which has been short-levied, would arise only in the case where the goods were already cleared. Hence we hold that it was open to the Department to demand duty from the appellant under Section 28 of the Customs Act without recourse to any other procedure of revision of assessment.
11.0. Issue No. III: Whether, in the facts of this case, the demand of duty is barred by limitation.
11.1. The learned counsel for the appellant reiterated the relevant submissions of De-Nocil contained in their reply to show-cause notice dated 5.10.2001, which we have summarized in para 4 (d) of this order. In this connection, he relied on Geo Tech Foundations & Constructions vs Commissioner [2008 (224) ELT 177 (SC)] wherein a demand of Central Excise duty was held to be time-barred on the facts of the case. In that case, a show-cause notice which was issued within the normal period of limitation under Section 11A (1) of the Central Excise Act demanding duty for the period, June 1994 to February 1995, was withdrawn and a second show-cause notice was issued on 8.5.1996 for the same purpose by invoking the extended period of limitation on the alleged ground of suppression of facts by the assessee. On these facts, the Supreme Court held that, as the allegation had not been made in the first show-cause notice and the facts allegedly suppressed by the assessee were already known to the department, it was not open to the department to raise the allegation in the second show-cause notice. The learned counsel contended before us that anything alleged in show-cause notice dated 5.10.2001 to invoke the extended period of limitation under Section 28 (1) of the Customs Act was inconsequential inasmuch as no such allegation had been raised in the earlier set of 19 show-cause notices.
11.2. The learned JCDR submitted that the show-cause notice dated 5.10.2001 was issued in continuation of the earlier set of 19 show-cause notices which had been issued within the normal period of limitation, and, therefore, the demand of duty on De-Nocil was not time-barred. He claimed support from B.P.L. India Ltd vs. Commissioner [2002 (143) ELT 3 (SC)] wherein the challenge set up by the assessee against show-cause notice dated 20.2.1986 which was issued by the Collector of Central Excise in continuation of two earlier show-cause notices (dated 6.12.1982 and 2.4.1983) issued by the Superintendent of Central Excise demanding duty for the period from 2.12.1981 to 26.2.1982 was held by the apex court to be untenable.
11.3. It is not in dispute that 19 show-cause notices were issued on 16-02-1999 to the appellant under Section 28(1) of the Customs Act within the normal period of limitation. The main allegation raised in those show-cause notices was that the DEPBs used by the appellant for duty-free clearance of the subject consignments had been wrongly obtained on the basis of false declarations and fraudulent documents and that the credit entries shown therein had been allowed without export of goods. Those show-cause notices had sought to recover the duty from the appellant by denying them the benefit of Notification No.34/1997-Cus. Subsequently, after gathering further evidence by way of recording statements of the persons involved in the DEPB racket, obtaining inputs from the DGFTs office etc, the DRI issued show-cause notice dated 05-10-2001 to the appellant for recovery of the sum of the amounts of duty demanded in the aforesaid 19 show-cause notices, under Section 28(1) of the Customs Act, with interest thereon under Section 28AB of the Act. As is indicated in para 70 of this show-cause notice dated 05-10-2001, it was issued to cover all the additional facts of the cases in addition to the facts covered in the 19 less-charge demanded notices issued to De-Nocil for importing consignments against DEPBs obtained by the racketeers on the basis of forged Shipping Bills and BCERs.
11.4. It has been argued by the ld. Counsel that the show-cause notice dt. 05-10-2001 is an independent show-cause notice and the demand of duty raised therein is barred by limitation inasmuch as the notice did not allege any fraud or other ingredients of the proviso to Section 28(1) of the Act against the appellant. In this connection, he has relied on the Honble Supreme Courts judgment in Geo Tech Foundations & Constructions. In that case, a show-cause notice which was issued within the normal period of limitation under Section 11A(1) of the Central Excise Act demanding duty for the period from June, 1994 to February, 1995 was withdrawn and another show-cause notice was issued on 08-05-1996 for the same purpose by invoking the extended period of limitation on the alleged ground of suppression of facts by the assessee. On these facts, the apex court held that as the allegation had not been made in the first show-cause notice and the facts allegedly suppressed by the assessee were already known to the Department, it was not open to the Department to raise the allegation in the second show-cause notice. In the present case, all the 19 show-cause notices were issued within the normal period of limitation and none was withdrawn. A comprehensive show-cause notice was issued on 05-10-2001 in continuation of the earlier show-cause notices. The purpose of issue of this show-cause notice is crystal clear from para 70 thereof. This show-cause notice did not change the complexion of the departments case. The earlier show-cause notices had alleged that the DEPBs had been obtained on the basis of false declarations and fraudulent documents. The later show-cause notice presented details of the fraud and also stated the additional fact that the DEPBs had been cancelled ab initio by the licensing authority. The case of the department remained consistently that De-Nocil as transferee of the DEPBs was not entitled to the benefit of Notification No.34/97-Cus. on the strength of the DEPBs which had been obtained by the transferors fraudulently on the basis of forged documents and hence De-Nocil was liable to pay the duty on the goods imported by them. In this scenario, we have to accept the contention of the ld. JCDR that the show-cause notice dt. 05-10-2001 was issued in continuation of the earlier set of 19 show-cause notices and that the demand of duty was within the normal period of limitation. In our view, the best evidence in support of this contention is the fact that all the show-cause notices were adjudicated upon by the Commissioner in a single proceeding culminating in the impugned order. The decision cited by the ld. Counsel is, therefore, not applicable. But the decision of the apex court in the case of BPL India Ltd. cited by the ld. JCDR appears to be supportive of the Revenue. In that case, the Collector of Central Excise had issued a show-cause notice dt. 20-02-1986 in continuation of 2 earlier show-cause notices dt. 06-12-1982 and 02-04-1983 issued by the Superintendent of Central Excise demanding duty for the period from 02-12-1981 to 26-02-1982. The challenge set up by the assessee against the Collectors show-cause notice was rejected by the Supreme Court.
11.5. As the demand of duty was raised within the normal period of limitation in this case, issue No.III has to be answered in the negative against the appellant. Ordered accordingly.
12.0. Issue No.IV: Whether the appellant is liable to pay interest on duty under Section 28AB of the Customs Act.
12.1. Section 28AB as it stood from the date of its enactment (28-09-1996) to the date of its amendment (11-05-2001) reads as under:-
28AB.?Interest on delayed payment of duty in special cases. - (1) Where any duty has not been levied or has been short levied or erroneously refunded by reason of collusion or any wilful misstatement or suppression of facts, the person who is liable to pay the duty as determined under sub-section (2) of section 28, shall, in addition to the duty, be liable to pay interest at such rate not below ten per cent and not exceeding thirty per cent per annum, as is for the time being fixed by the Board, from the first day of the month succeeding the month in which the duty ought to have been paid under this Act, or from the date of such erroneous refund, as the case may be, but for the provisions contained in sub-section (2) of section 28, till the date of payment of such duty.
(2)?For the removal of doubts, it is hereby declared that the provisions of sub-section (1) shall not apply to cases where the duty became payable before the date on which the Finance (No. 2) Bill, 1996 receives the assent of the President. [Underlining supplied] As the show-cause notices in this case did not allege any collusion, wilful misstatement or suppression of facts against De-Nocil, the above provision of law is not applicable. But the appellant cannot escape interest liability under Section 28AB as amended w.e.f. 11-05-2001. The amended Section 28AB reads as follows:-
28AB.?Interest on delayed payment of duty in special cases. - (1) Where any duty has not been levied or has been short levied or erroneously refunded, the person who is liable to pay the duty as determined under sub-section (2), or has paid the duty under sub-section (2B), of section 28, shall, in addition to the duty, be liable to pay interest at such rate not below ten per cent and not exceeding thirty per cent per annum, as is for the time being fixed by the Central Government, by notification in the Official Gazette, from the first day of the month succeeding the month in which the duty ought to have been paid under this Act, or from the date of such erroneous refund, as the case may be, but for the provisions contained in sub-section (2), or sub-section (2B), of section 28, till the date of payment of such duty:
Provided that .. .
(2)?The provisions of sub-section (1) shall not apply to cases where the duty or interest had become payable or ought to have been paid before the date on which the Finance Bill, 2001 receives the assent of the President. [Underlining supplied] 12.2. We have already held to the effect that, as the appellant did not satisfy condition No.(ii) of Notification No.34/97-Cus., they ought to have paid duty on the goods imported by them. The duty not levied on the goods was demanded under sub-section (1) of Section 28 of the Customs Act by the department by issuing the subject show-cause notices and the same has been determined by the Commissioner under sub-section (2) in adjudication of the said show-cause notices. In this factual situation, the assessee has to pay interest on the duty amount under sub-section (1) of Section 28AB as amended. However, no interest is leviable for any period prior to 11-05-2001 as sub-section (2) of Section 28AB forbids levy for past period. Accordingly, we hold that the appellant is liable to pay interest on duty under Section 28AB from 11-05-2001 to the date of payment of duty.
13.0. Issue No. V : Whether the penalty imposed on the appellant under Section 114A of the Customs Act is sustainable.
13.1. Section 114A (without the provisos thereto) reads as under:
114A. Penalty for short-levy or non-levy of duty in certain cases -Where the duty has not been levied or has not been short-levied or the interest has not been charged or paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any willful misstatement or suppression of facts, the person who is liable to pay the duty or interest, as the case may be, as determined under sub-section (2) of section 28 shall, also be liable to pay a penalty equal to the duty or interest so determined. As we have already stated, the show-cause notices had not alleged collusion, wilful misstatement of facts or suppression of facts against the appellant. Hence imposition of the above penalty on them is beyond the scope of the show-cause notices. The said penalty is therefore set aside.
14.0. Appeal No.C/85/2003 filed by Shri P. K. Srinivas 14.1. This appeal is directed against the penalty of Rs. ten lakhs imposed on the appellant under Section 112 (a) of the Customs Act on the ground that he was also instrumental in the procurement of DEPBs by De-Nocil from racketeers. The counsel for the appellant submitted that the appellant was not aware of the fraudulent origin of the DEPBs and also that he did not ask for or receive any money from De-Nocil. The appellant was merely a contact between DEPB suppliers and De-Nocil, for which he received a commission from one Kirit Shrimankar. The learned counsel further submitted that there was no specific allegation in the show-cause notice that the appellant was involved in the racket. In any case, as the appellant did not do anything which rendered the goods imported by De-Nocil liable to confiscation under Section 111 of the Customs Act, no penalty was imposable on him under Section 112 (a) of the Act. Learned JCDR, claiming support from a statement of P. K. Srinivas, dated 13.1.1999, recorded under Section 108 of the Customs Act, argued in justification of the penalty imposed on him.
14.2. After considering the submissions, we have found no justification for the penalty imposed on the appellant. The show-cause notice dated 5.10.2001 had inter alia proposed a penalty on De-Nocil under Section 114A / Section 112 of the Customs Act. The adjudicating authority imposed penalty on them under Section 114A of the Act, which we have set aside. The fifth proviso to Section 114A reads thus: provided also that where any penalty has been levied under this section, no penalty shall be levied under Section 112 or Section 114. Now that the penalty under Section 114A stands vacated, the question might arise as to whether Section 112 could be invoked against De-Nocil. In this connection, we must have a closer look at the relevant proposal in the show-cause notice dated 5.10.2001. The proposal was to impose a suitable penalty on De-Nocil under Section 112 of the Customs Act in lieu of confiscation as the goods imported by De-Nocil were not available for confiscation. A penalty under Section 112 of the Customs Act in lieu of confiscation is unheard of in law though such penalty could be imposed on an importer who is found to have rendered the goods imported by him liable to confiscation under Section 111 of the Act. This is the reason why we refrained from imposing alternative penalty under Section 112 of the Customs Act on De-Nocil.
14.3. Where any penalty under Section 112 of the Customs Act is not imposed on De-Nocil regarded as the main offender by the department in this case, there can be no penalty under the same provision of law on P. K. Srinivas on the ground of abetment. In the result, the penalty on P.K. Srinivas is vacated and his appeal is allowed.
15.0. It is ordered as follows:
15.1. The demand of duty against the appellant in Appeal No.C/19/2003 is upheld. The appellant shall pay interest thereon under Section 28AB of the Customs Act for the period from 11.5.2001 to the date of payment of duty.
15.2 The penalty imposed on the above appellant under Section 114A of the Customs Act is set aside.
15.3. The Commissioners order holding the goods liable to confiscation under Section 111 (o) of the Customs Act is upheld, but there shall be no penalty on the above appellant under Section 112 of the Act.
15.4. Appeal No.C/19/2003 is disposed of as above.
15.5. The penalty imposed on the appellant in Appeal No.C/85/2003 is set aside and the appeal is allowed.
( Pronounced in Court on 16.5.2011 ) ( S.K. GAULE ) ( P.G. CHACKO ) MEMBER (TECHNICAL) MEMBER (JUDICIAL) tvu 1 60