Gujarat High Court
Rado Brass Industries vs Union Of India on 23 July, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 10690 of 2002
With
R/SPECIAL CIVIL APPLICATION NO. 10691 of 2002
With
R/SPECIAL CIVIL APPLICATION NO. 10692 of 2002
With
R/SPECIAL CIVIL APPLICATION NO. 10693 of 2002
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
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Approved for Reporting Yes No
✔
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RADO BRASS INDUSTRIES & ANR.
Versus
UNION OF INDIA & ORS.
==========================================================
Appearance:
MR DHAVAL SHAH(2354) for the Petitioner(s) No. 1,2
DEEPAK N KHANCHANDANI(7781) for the Respondent(s) No. 2
NOTICE NOT RECD BACK for the Respondent(s) No. 1,3
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 23/07/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. These petitions are filed along with SCA No. 10689 of 2002. In SCA No. 10689 of 2002, the Division Bench of this Court passed two Page 1 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined different Orders as there was difference of opinion between the members of the Bench and the matter was placed before the Hon'ble Chief Justice and the matter was assigned to a third Judge.
2. In view of the above development, these matters were not heard by the Division Bench, awaiting the outcome of the SCA No. 10689 of 2002, as all the matters are arising from the common issue of challenge to the show-cause notice issued by the respondent No.3- Additional Director General, Directorate of Revenue Intelligence, Mumbai (DRI) dated 27.8.2002.
3. Pursuant to the investigation carried out by the DRI, Gandhidham who gathered intelligence that M/s. RSI Ltd, Calcutta had exported CD ROMS at grossly over invoiced Page 2 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined value under DEPB Scheme with intent to fraudulently obtain DEPB credit and thereby cause evasion of Customs duty.
4. Pursuant to such intelligence information, the Officers of the DRI carried out search at the business premises of the CHAs at Kandla/ Gandhidham on 12.1.1999, which resulted in recovery of various incriminating documents which were seized under four Panchnamas of the same date. It was the case of the DRI that on scrutiny of such seized documents, it was revealed that in September, 1997, M/s. RSI Ltd. had exported 2,00,000 Pcs of CD ROMS under DEPB Scheme from the Port of Kandla under 35 Shipping bills for a total declared value of Rs.16.60 Crores to M/s. Shebab International Pte Ltd, Singapore and the port of discharge was shown as New York.
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5. Investigation further revealed that in respect of the 35 consignments of CD ROMS exported by M/s. RSI Ltd., Calcutta, four (04) DEPB Licences for a total credit to the tune of Rs.3,32,17,874/- were issued on post export basis by the office of the Jt. DGFT (CLA) New Delhi. M/s. RSI Ltd., Calcutta had subsequently sold/ transferred the four DEPB Licences to various parties.
6. The petitioners are one of those parties who have purchased such DEPB Licences which were sold/ transferred by M/s. RSI Ltd.
Calcutta and, therefore, the impugned show-
cause notice is issued by the DRI wherein the petitioners were joined as co-noticees by making them liable for payment of duty on the goods which were imported duty-free against the aforesaid DEPB Licences.
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7. Being aggrieved, the petitioners have preferred these petitions challenging the jurisdiction to issue show-cause notice by the respondent authority.
8. It was contended by the learned advocate Mr. Dhaval Shah for the petitioner that the show-cause notice issued by the DRI invoking the extended period of limitation of 5 years for raising the demand without recording the prima-facie satisfaction and without even an allegation in the notice that the said duty has not been levied or had been short levied by reason of collusion or willful mis-
statement or suppression of facts by the petitioners, would render such notice without jurisdiction and non est.
9. It was further submitted that transferrable DEPB (Duty Entitlement Pass Page 5 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined Book) had been issued by the competent authority on Post exports basis against exports already made, as opposed to a Pre-
export basis, after due verification by such authority and, therefore, it is not open to the respondents to seek recovery of Customs duty from the transferees who, relying upon the department, have parted with valuable consideration for the same.
10. It was, therefore, submitted that the impugned notices are liable to be quashed and set-aside.
11. It was also submitted by learned advocate Mr. Dhaval Shah for the petitioner that as per the provisions of sub-section (1) of Section 28 of the Customs Act, proceedings under the said provisions can be initiated beyond period of six months from the relevant date and only Page 6 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined in cases in which duty has not been levied or has been short levied, etc. by reason of collusion or any willful mis-statement or suppression of fact by the importer or exporter or the Agent or the employee of the importer or exporter. It was submitted that on perusal of the impugned show-cause notice, the petitioner is the importer and in the entire show-cause notice, there is not a single allegation of collusion or mis-statement or suppression of material facts with intent to evade the duty against the petitioner and, therefore, so far as the petitioners are concerned, the respondents could not have invoked the extended period of limitation.
12. In support of his submissions, learned advocate Mr. Shah referred to and relied upon the following decisions:
1. Collector of Central Excise Vs. Page 7 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined Chemphar Drugs & Liniments, reported in 1989 (40) ELT 276 (SC);
2. Arora Matthey Ltd. vs. Commissioner of C. Ex., Calcutta-1, reported in 1999 (112) ELT 11 (Cal);
3. Panama Chemical Works vs. Union of India, reported in 1992 (62) ELT 241 (MP)
4. Pushpam Pharmaceuticals Company Vs. Collector of Central Excise, Bombay, reported in 1995 Supp (3) SCC 462 (SC);
5. J.M. Baxi and Co. Vs. Commissioner of Customs, New Kandla, reported in 2000 (120) ELT 29 (SC).
Referring to the above decisions, it was submitted that it is a settled position of law that for the purpose of invoking jurisdiction under Section 28 of the Act beyond a period of Page 8 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined six months from the relevant date, there has to be an allegation of collusion or any willful mis-statement or suppression of facts in the show-cause notice against the Noticee.
13. Learned advocate Mr. Shah also relied upon the decision of the Hon'ble Supreme Court in the case of L. Hriday Narain v. Income Tax Officer Bareilli, AIR 1971 SC 33, wherein the petitioner moved the Hon'ble High Court of Allahabad and the High Court had entertained the petition. The Supreme Court in the said decision held that if the High Court did not entertain the petition, the petitioner could have moved the Commissioner in revision because on the date on which the petition was moved, the period prescribed by section 33A of the Act had not expired.
14. Learned advocate Mr. Shah also referred to and relied upon the decision of the Hon'ble Page 9 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined Apex Court in case of Whirlpool Corporation Vs. Registrar of Trademarks, Mumbai and others, reported in 1998 (8) SCC 1, for the proposition that the jurisdiction of the High Court in entertaining a writ petition under Article 226 of the Constitution, in spite of the alternative statutory remedies, would be exercised in a case where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation.
15. On the merits of the matter, it was submitted that the petitioners had purchased the DEPB Licence as a bonafide purchaser without having any iota of doubt as the said licencees were duly authorised by the DGFT and, therefore, the petitioner has nothing to do with the procurement of the Licence by Page 10 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined alleged illegal means by the M/s. RSI Ltd.
Calcutta. It was, therefore, submitted that in such circumstances the impugned show-cause notices are without jurisdiction.
16. On the other hand, learned advocate Mr. Deepak Khanchandani for the respondent on a query raised by this Court as to what has happened in case of M/s. RSI Ltd and M/s.
Adani Exports Ltd.,who are co-noticees in the impugned show-cause notices, learned advocate placed on record the order-in-original dated 2.5.2017 passed by the DRI, Mumbai whereby the proceedings under show-cause notice dated 27.8.2002 of which the petitioners are also co-noticees have been dropped.
17. In view of the above developments, which have taken place, when the proceedings under the same show-cause notice against M/s.RSI Ltd, who has alleged to have obtained the Page 11 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined Licencees by fraudulent export, is dropped, the petitioners who are beneficiary to the licencee cannot be subjected to any further proceedings pursuant to the same show-cause notice.
18. It was also pointed out by learned advocate Mr. Deepak Khanchandani that the order-in-original dated 2.5.2017 passed by the DRI Mumbai is subject matter of challenge before the CESTAT.
19. We are, therefore, of the opinion that even if the show-cause notice is permitted to proceeded following the decision in case of M/s. RSI Ltd, vide order dated 2.5.2017, the proceedings under the show-cause notice qua the petitioners have to be dropped. It would be, therefore, germane to refer to the findings arrived at by DRI Mumbai in the order-in-original dated 2.5.2017 as under:
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4.1.3 I find that out of the 15 titles exported, the titles Advanced Games, Panchatantra, The Jungle Book, My Talking Page 13 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined Dictionary and Animation Tour were found to have been exported by PPL to M/s Multimedia Intertrade Singapore and M/s Intermetalico, Singapore and the exports carried out by these respective firms were @US$ 1.60.
Similarly, the following 5 titles were exported by M/s Harshita Ltd. i) Panchatantra
ii) Animation Tour iii) Pochontas iv) Rainbow Children Park v) Animated Word Book and enquiries from the buyers overseas revealed that they had purchased the sme for US$ 0.50 to US $ 1.00. The titles 1) My talking dictionary 2) Animation Tour 3) Advanced Games 4) Rainbow Children Park and My Animation Work Book were common with those exported by M/s Intermetailco Pte. Ltd. Singapore and M/s Multimedia Intertrade (S) Pte. Ltd. Singapore to M/s Mulsync Trends Inc. USA and the value of these titles were only US$ 2.50. I find that investigation pointed out that overseas inquiries in USA conducted through Consulate General of India, New York revealed that the consignments covered by all the 35 Shipping Bills were actually cleared by M/s Pacific Software Inc. for a value of only US$ 2,11,050/- against the Invoice issued by M/s Shebab International Ltd. who is the consignee in Page 14 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined the impugned exports by RSI Ltd. It was further specified that out that against the FOB value of about US$ 4.6 million (appx. Rs. 16.6 Crore) declared to Indian Customs by M/s RSI Ltd, the goods were cleared in the USA for a mere US$ 2,11,050/- against an invoice of the same amount issued by M/s Shebab International Pte. Ltd., the consignee in the impugned exports carried out by M/s RSI Ltd. Accordingly, on conclusion of the investigation proceedings, investigation proposed re-determination of value as Rs. 75,61,921/- from the declared value of approx. Rs. 16.6 Crores and thereby reduced the DEPB credit accordingly. Investigation concluded that the exporters M/s RSI Ltd. were entitled to DEPB credit of only Rs. 15,12,384/- as against availed credit of Rs. 3,32,17,874/-, based on re-determination of value. Thus, an amount of Rs. 3,17,06,429/- was allegedly the non-entitled one, which is proposed to be recovered from the importers and exporters. I find that it is an undisputable fact on record that the DEPB Licence, which is alleged to have been obtained fraudulently by M/s RSI Ltd., were subsequently transferred to M/s Adani Ltd. who in turn utilized, part of the Licence for Page 15 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined their imports and also sold these licences to various other importers who also utilized the same for their respective imports. I find that the Show Cause has demanded the differential duty, from the exporters and importers, under Section 28 of the Customs Act, 1962. Besides demanding differential duty and interest leviable thereon, the Show Cause Notice also proposed confiscation of the impugned goods under Section 113(d) and 111(0) of the Customs Act, 1962. Similarly, penal provisions under Section 112 and 114 were invoked on the importers and exporters, respectively.
xxx xxx xxx 4.1.5 I find that investigation revealed that the impugned goods were purchased by RSI Ltd. from PPL. It is on record that PPL failed to produce any licence/agreement of details of payments of royalty/licence fees for replication of the CD ROMS exported/sold by them. Further, it was revealed during investigations by US Customs that PPL. had no authority or licence to replicate any products belonging to GD Micro, LLC, Micro Media Publishers Inc., or associated Cos. and Page 16 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined PPL had pirated all these titles. The CD ROMS exported by M/s RSI under DEPB Scheme were also supplied by PPL. Investigation pointed out that as PPL did not produce any copyright to duplicate these CD ROM titles, these duplications were apparently done in violation of the copyright laws and therefore the price at which M/s PPL had shown to have sold the CD ROMS to M/s RSI Ltd. could not be accepted as the present Market value of these CD ROMS. It was also revealed that only 0.46% of the total production of CD ROMS were sold by M/s PPL in the Indian market and that too in very small quantities. Accordingly, investigation concluded that the selling price of unauthorized, pirated and outdated CD ROMS shown by M/s PPL for sale of CD ROMS to M/sRSI (and other exporters) cannot be accepted as the correct PMV of these CD ROMS.
4.1.6 I also notice that investigation pointed out that the transactions between M/sRSI Ltd. and other exporters, who are allegedly engaged in export of CD ROMS at an inflated value and M/s Padmini Polymers Ltd. donot appear at arm's length. It was also pointed out that the 4 DEPB's which were transferred by RSI Ltd. to M/s Adani Exports Page 17 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined Ltd. were purchased by them (Adani) at a price equivalent to only 60% of the credit value of the DEPB Licences, which outrightly revealed their malafide intent and their role in being beneficiaries to the alleged fraud.
xxx xxx xxx 4.1.13 I find that the Noticees M/s RSI Ltd. purchased the goods from M/s Padmini Polyrners. I find that it is an undisputable fact on record that the exports of M/s Padmini Polymers are in excess as compared to the domestic sale. This is the primary version attributed by DRI in rejecting the domestic sale price, as the transaction value. It is also a matter of fact that Hon'ble CESTAT has observed that the 0.5% of the domestic sale price totally corroborates the transaction value in case of the export. Similarly, the corroborative elements, which undoubtedly raises a suspicion, in linking the exports cannot in any manner, be confirmed as related party transaction, which could have been the basis for rejection of transaction value. It is also a fact on record that the domestic sale price totally corroborates with the FOB values declared in Page 18 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined the Shipping Bill. Similarly, it is on record that M/s Padmini Polymers had levied Central Excise duty on the impugned goods. It is also on record that FOB value declared in the Shipping bills vis-à-vis the purchase price from the supplier i.e. Padmini Polymers depict a marginal increase, which undoubtedly, can be attributed to as "gain" in the transaction. Also the declared FOB value, in the instant case is less than 150% of AR4, thus complying with one of the prescribed criterion in the Board's Circular. Similarly, the Board's Circular had also given authority to the SIIB officers to prima facie examine, whether the declared value is 150% of AR4 or more. It has been prescribed that if it is more, market value needs to be conducted and a show cause Notice has to be issued, In this regard. It is a fact on record that the declared value in this case is less than the criterion prescribed by the Board. There is also nothing on record that the assessing officers pointed out any discrepancy, disputing the declared FOB value. With respect to the receipt of export remittance, I notice that the investigating agency pointed out that the export remittances were not received in full.
Page 19 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined However, I find that this is insufficient and inadmissible evidence, to rule in, fraudulent intention and a basis for rejection of the declared value, for the reason that, the export benefits are accorded to the exporters, after the due prescribed procedure is being followed by the Department. There is nothing on record which reveal that the Department had any time questioned about non- receipt of export remittance, which undisputedly, forms an important criterion in allowing export promotion benefits. It is also a fact that DGFT, after examining the due records of exports, provided the exporters with DEPB credits, which is being challenged by the department by the aforementioned Show Cause Notices, citing reasons of non-entitlement due to over- valuation aspect. Accordingly, the reason of non-receipt of export remittance fully, cannot be a basis for rejection of transaction value or rather ruling in, fraudulent motive, more so, when the eligibility of the same was duly verified by the Department and DGFT. I further find that Hon'ble CESTAT has ruled out the observations of the department, by relying upon the Board's Circular. The Board's Circular Page 20 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined explicitly mentioned about the scope of rejection of transaction value and the criteria, when market inquiry needs to be conducted. It is a fact on record that the impugned goods well fits, within the purview of the criterion, as determined by the Board. I find that the impugned goods, the supplier and the method of valuation adopted are similar to the impugned goods, which passed through litigation stages, and attained finality, wherein Hon'ble Apex Court upheld the Order of the Hon'ble CESTAT.
xxx xxx xxx 4.1.15 After, deciding on the issue of whether the declared value is the fair transaction value, in the impugned proceedings, I now proceed, to decide upon the 2nd aspect of allegation i.e. demand of duty alleged to have obtained by resorting to duty free imports under the aforementioned licences by the importers. It is on record that the noticee importers utilized the scrips for the duty free imports which is alleged to have obtained fraudulently. It is noticed that the importers who imported by using the said DEPB scrips, which is alleged Page 21 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined to have been obtained by fraudulent means by M/s RSI Ltd. (the exporter) and transferred to the importers by M/s Adani, Exports Ltd. who subsequently, utilized part of the same for their imports and sold the remaining to various importers, who also, in tum, utilized the same for their imports. The SCN alleged that since the respective imports are made by utilizing the DEPB obtained fraudulently, the import duty foregone amounting to Rs. 3,17,06,429/- is recoverable from the Importers and Exporters jointly and collectively under the proviso to Section 28(1) of the Customs Act, 1962. I find that the extant provisions which enables the department to recover duty in case of export incentives received by the exporters and a fraudulent intention against the said receipt is ruled in, is proviso to Section 28AAA of the Customs Act, 1962. It is expressly clear in terms of explanation (2) to the subsection, the said provisions would be restricted to the utilization of scrips on or after the date on which the Finance Bill received the assent of the President i.e. 28.05.2012 in this case. Therefore I find that introduction of Section 28AAA of the Customs Act, 1962 also limits the recovery of Page 22 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined such duty forgone from 28.05.2012 onwards only. The impugned goods prima facie does not fit into the norms of recovery proceedings as per the extant provisions. Besides the legal provisions, which restrict recovery, I also take cognizance of my findings on the issue of declared transaction value. I have already held that the transaction value declared by the exporters are fair value and cannot be rejected, thereby also concluding that the DEPB entitlements are genuine. It is also a fact that the DEPB/DEEC credits are accorded to the exporter, after the same is duly certified by the Department and also thoroughly evaluated by DGFT. Once, the entitlements are held to the genuine, the same totally negates the subsequent allegation of demand of duty from the exporters. Accordingly, taking cognizance of the Apex Court verdict and the extant provisions in force, I refrain from demanding the differential duty from the exporters.
4.1.16 Now, I proceed towards the 3rd point of determination, i.e. demand of duty foregone from the importers. As discussed above, I have already held that the transaction value declared by the exporters Page 23 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined are fair value and cannot be rejected, thereby concluding that the DEPB benefits are genuine. Once, the entitlements are held to the genuine, the same totally negates the subsequent allegation of demand of duty from the importers. It is also a fact on record that the importers in the instant case, purchased the scrips from Adani Exports Ltd. which were transferred to them by M/s RSI Ltd. The Show Cause Notice has invoked penal provisions on the importers, who utilized the scrips, alleged to have been obtained fraudulently, for their respective imports under Section 112 and 114A of the Customs Act, 1962. Further the scrips were issued by the DGFT after verification of the exports by the Customs & DGFT authorities and the same were made transferable by DGFT. Further during the time of purchase of the scrips the importers were unaware of the fraudulent nature of the scrips. Even in the show cause notice it is nowhere alleged that the importers had colluded with the exporters. Also, during the time of import of the goods the scrips were valid. I find that the Hon'ble Supreme Court in the case of Sneha Sales Corporation - 2000 (121) ELT 163 (SC) has held that the subsequent cancellation of Page 24 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined notices could not affect the imports already made prior to such cancellation. Thus, the benefits of DEPB/ VKGUY scrips could not be denied to the importers. Therefore, I am of the view that there was no improper importation of the goods on the part of the importers and hence I find that no penalty can be imposed on the importers under section 112 of the Customs Act, 1962. Further, as there was no suppression or mis-declaration on the part of the noticee importers I find that no penalty under Section 114A of the Customs Act, 1962 is applicable. In support of my stand, I find that the CESTAT, WZB vide its order A/2919-2994/15/CB dated 18.08.2015 has in a similar issue held that "the confiscation of goods imported by the appellants who are transferees of the licenses scrips does not arise. The demands of duty against them are set aside". Accordingly, I refrain from demanding duty and also from imposing penalty on the importers."
20. In view of the above findings arrived at by the DRI, even on merits the show-cause notice would not be tenable against the Page 25 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined petitioners who have purchased DEPB Licence from open market on payment of consideration for import of the goods without payment of duty. It is also pertinent to note that the demand raised qua the petitioners are below the threshold limit challenging the order by the Revenue before the CESTAT and, therefore, even if the decision is reversed against M/s.
RSI Ltd by the CESTAT in view of the order-in-
original which is in operation since 2017, but for pendency of these petitions would have been followed by the respondent in last 8 years.
21. Therefore, considering the overall facts and the subsequent developments which have taken place coupled with the fact that it is not in dispute that there is no collusion or any willful mis-statement or suppression of fact alleged in the impugned show-cause Page 26 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025 NEUTRAL CITATION C/SCA/10690/2002 JUDGMENT DATED: 23/07/2025 undefined notice, which would have permitted the respondent to extend the period of limitation by 5 years, as per provision of Section 28(1) of the Act, impugned notice would not survive.
22. Therefore, on both counts, on the ground of jurisdiction as well as on merits in view of subsequent developments, the impugned show-
cause notice would not survive. The impugned show-cause notice dated 27.8.2002 so far as the petitioners are concerned, is hereby quashed and set-aside. Rule is made absolute to the aforesaid extent. No order as to costs.
(BHARGAV D. KARIA, J) (PRANAV TRIVEDI,J) SAJ GEORGE Page 27 of 27 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:14:36 IST 2025