Tribunal rejects Revenue appeal on Styrene Monomer import under DEPB scheme

The Appellate Tribunal CESTAT AHMEDABAD rejected the Revenue's appeal against the Commissioner (Appeals) order regarding the import of Styrene Monomer under the DEPB scheme. The exporter had fraudulently obtained the DEPB license. The Tribunal upheld M/s Kanak Metal Industries' appeal, resulting in the rejection of the Revenue's appeal.

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Issues: Whether the benefit of Notification No. 45/2002-Cus under the DEPB scheme could be denied to the importer on the basis of alleged fraudulent procurement of the exporter's DEPB licence, and whether the Revenue's appeal against setting aside of the adjudication order was sustainable.

Analysis: The allegation against the importer rested on the premise that the exporter had obtained the DEPB licence by over-invoicing. That foundational premise had already been negatived in the connected proceedings concerning the exporter, and the Tribunal's order in that matter had been upheld. Once the underlying allegation stood displaced, the basis for denying the exemption benefit to the importer no longer survived.

Conclusion: The denial of the exemption benefit was not sustainable, and the Revenue's challenge to the order of the Commissioner (Appeals) failed.

Final Conclusion: The appeal was rejected and the order in favour of the importer was maintained.

Ratio Decidendi: Where the foundational allegation of fraudulent procurement of the DEPB licence is rejected in connected proceedings, the consequential demand or denial of exemption against the importer cannot be sustained.

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