Tribunal waives pre-deposit for lack of evidence in DEPB Scrip case

The Tribunal granted relief to the applicant by waiving the pre-deposit of interest and penalty during the appeal process. The decision was based on the lack of evidence showing the applicant's connivance with the company that fraudulently obtained the DEPB Scrip. Despite the duty liability admitted and paid by the company, no direct involvement of the applicant in the fraudulent activities was found, leading to the Tribunal deeming the penalty imposition unsustainable.

---

---

Issues Involved:
Waiver of pre-deposit of interest and penalty for purchasing DEPB Scrip from the market obtained by another company, liability for penalty due to importing goods against DEPB Scrip obtained fraudulently, lack of finding of connivance with the company that obtained the DEPB Scrip fraudulently.

Analysis:
The applicant filed an application seeking waiver of pre-deposit of interest and penalty amounting to Rs.17,72,626. The contention put forth was that the DEPB Scrip was purchased from the market, originally obtained by another company, M/s. Rajat Pharmachem Ltd. It was alleged that the said company inflated the value of exported goods to acquire the DEPB Scrip, which was then sold to the applicant for import purposes. Notably, M/s. Rajat Pharma Ltd. admitted duty liability before the Settlement Commission and paid the duty. However, there was no finding in the impugned order indicating the applicant's connivance with M/s. Rajat Pharmachem Ltd. to obtain the DEPB Scrip. Therefore, the imposition of penalty was deemed unsustainable by the applicant.

The Revenue, on the other hand, relied on the lower authority's findings to argue that the applicant took undue advantage by importing goods against the DEPB Scrip acquired fraudulently, hence making the applicant liable for penalty. Upon reviewing the adjudication order, it was observed that there was no explicit finding suggesting the applicant's involvement in fraudulent activities with M/s. Rajat Pharmachem Ltd. regarding the DEPB Scrip. Given that the duty liability was admitted and paid by the said company without any evidence of connivance with the applicant, it was considered that the applicant had a strong case. Consequently, the Tribunal decided to waive the pre-deposit of interest and penalty, staying the recovery during the appeal's pendency.

In conclusion, the stay petition was allowed by the Tribunal, granting the applicant relief from the pre-deposit of interest and penalty during the ongoing appeal process.

---