Validity of transferred DEPB scrips before cancellation protects a bona fide importer from duty demand and confiscation

A DEPB scrip issued by the competent authority remained effective until cancellation, so an importer who acquired and used it before cancellation could rely on its validity where no knowledge of the exporter's fraud was shown. On those facts, the transferee was treated as holding good title, and the case was distinguished from forged or non-existent scrip situations. Accordingly, duty demand, confiscation and redemption fine were not sustainable against the transferee importer.

---

---

Issues: Whether duty demand, confiscation and redemption fine were sustainable where the DEPB scrip was originally issued by the licensing authority, later cancelled for fraud by the exporter, but had been used for import by a transferee who was not shown to have knowledge of the fraud.

Analysis: The DEPB scrip had been issued by the competent authority and remained valid at the time of import; cancellation came later. There was no allegation or evidence that the respondent participated in, or knew of, the exporter's fraud. In such circumstances, the scrip was treated as valid until cancellation, and the transferee was entitled to rely on good title. The situation was covered by the principles governing voidable transactions and transfer of title, and was distinguishable from cases involving forged or non-existent scrips.

Conclusion: The duty demand, confiscation and redemption fine were not sustainable against the respondent.

---