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Issues: Whether, under Notification No. 203/92-Cus., the transferee of a transferable value based advance licence was bound to prove that the original licence-holder had discharged the export obligation without availing input stage credit, or whether the benefit of the notification could be denied to the transferee on that ground.
Analysis: The notification created a scheme in which the licensing authority, namely the DGFT, was entrusted with satisfaction as to discharge of export obligation and endorsement of transferability. Once the DGFT had examined the certificate and endorsed transferability, the customs authorities could insist only on production of the endorsed licence and certificate, and could not sit in appeal over the DGFT's satisfaction or require the transferee to independently prove facts relating to the original exporter's compliance. The transferee had no practical means to verify whether the transferor had availed Modvat credit, and the law does not compel performance of an impossible act. The Bench also held that, even if fraud was alleged in obtaining transferability, rights of a bona fide transferee for value could not be displaced by the customs authorities, and any action for misrepresentation lay against the party responsible before the competent authority.
Conclusion: The condition concerning non-availment of input credit was to be satisfied by the original licence-holder, not by the transferee, and the transferee could not be denied exemption on that basis.
Final Conclusion: The reference was answered in favour of the importer-transferee, and the notification benefit was held available on the strength of the endorsed transferable licence.
Ratio Decidendi: Where a fiscal exemption scheme vests the competent licensing authority with final satisfaction on fulfilment of the antecedent conditions and endorses transferability, the customs authorities cannot reopen that satisfaction against a bona fide transferee or require the transferee to prove matters exclusively within the transferor's knowledge.
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