2014 (5) TMI 828 - AT - Customs

Tribunal allows Revenue's appeal on duty recovery using DEPB scrips, rules against respondents.

CC, Amritsar Versus M/s Moon Light Auto Ltd.

The Tribunal allowed the Revenue's appeal regarding the recovery of duty saved by using DEPB scrips, overturning the Commissioner (Appeals) decision. It ... Duty demand - DEPB Scrips - Confiscation of goods - Redemption fine - Whether the Respondents are liable to pay duty that was saved by them as a result of using the DEPB scrips - Held that:- When the Assessee acquired DEPB scrips from market without being an original acquirer, as an abundant caution, to avoid evil consequence of fraudulently obtained scrips, could have safeguarded its interest causing enquiry from JDGFT as to genuineness of the scrips. But that was not done. The appellant failed to acquire no title over the scrips but became beneficiary of ill got scrips. Notificational benefit was availed at the cost of public exchequer which is required to be surrendered for the undue gain made. Bona fides was not established by the appellant failing to cause enquiry from JDGFT. When such bona fide is not established the appellant shall not avail the benefit - there is no evidence to show that the Respondents had made any inquiries with the DGFT authorities who had issued the scrips so as to prove their bona fide - order of the Commissioner (Appeals) is not sustainable and the Appeal of the Revenue has to be allowed so far as recovery of duty is concerned. No exports, on the basis of which DEPB scrips were issued, had actually taken place and there was no entitlement to DEPB benefit even to the party to which the DEPB scrip was originally issued on the basis of forged documents. The Revenue, therefore, cannot be made to suffer the consequence of a transaction where no exports actually took place and duty entitlement was secured on the basis of forged documents - Decided partly in favour of assessee. Issues Involved:1. Liability to pay duty saved by using DEPB scrips.2. Applicability of the extended period of limitation.3. Liability to pay redemption fine in lieu of confiscation of goods.Issue No. 1: Liability to Pay Duty Saved by Using DEPB ScripsThe Tribunal examined whether the respondents were liable to pay the duty saved by using DEPB scrips. The Commissioner (Appeals) had dropped the duty demand, relying on the judgment of the Punjab & Haryana High Court in Commissioner of Customs v. Leader Valves Ltd., which was upheld by the Supreme Court. However, the Tribunal referred to the case of Friends Trading Company v. CC, Jalandhar, where it was established that DEPB scrips obtained fraudulently could not be used to claim duty benefits. The Tribunal emphasized that the respondents had not made any inquiries with the DGFT to verify the genuineness of the DEPB scrips, thus failing to establish bona fide. Consequently, the Tribunal held that the order of the Commissioner (Appeals) was unsustainable and allowed the Revenue's appeal regarding the recovery of duty.Issue No. 2: Applicability of the Extended Period of LimitationThe Tribunal addressed whether the extended period of limitation was applicable. The respondents argued that the extended period could not be invoked against the bona fide purchase of DEPB scrips subsequently canceled. However, the Tribunal referred to the judgment in Friends Trading Co. v. UOI, which held that the extended period of limitation could be invoked even if the fraudulent DEPB scrips were obtained by predecessors. The Tribunal concluded that the extended period of limitation was correctly invoked in this case.Issue No. 3: Liability to Pay Redemption FineThe Tribunal considered whether the respondents were liable to pay redemption fine. The respondents contended that since the goods were neither available physically nor was any bond executed, redemption fine was not imposable. The Tribunal found merit in this contention, noting that the law was settled on this point. The Tribunal also referred to the decision in Commissioner of Customs, Amritsar v. Patiala Castings Pvt. Ltd., which supported the respondents' position. Consequently, the Tribunal held that redemption fine was not imposable in this case.Conclusion:The Tribunal partially accepted the Revenue's appeal, allowing the recovery of duty but rejecting the imposition of redemption fine. The Tribunal's decision was pronounced in open court on 10.12.2013.