Advance licence exemption turns on burden of proof: transferee need not prove non-availment of Modvat credit by exporter.

Where an advance licence is validly transferred, the transferee is not required to prove that the original exporter did not avail Modvat credit in order to retain exemption under Notification No. 203/1992-Cus. The burden of showing non-availment of input-stage credit rests on the original licence holder, and not on the transferee. In the absence of any allegation of forgery or falsification in the licence or its transfer, the authority's approval supports compliance with the notification conditions. A demand that forces the transferee to prove the conduct of the transferor is unsustainable, and denial of exemption on that basis is not justified.

---

---

Issues: Whether the transferee of an advance licence was required to prove that the original exporter had not availed input-stage credit so as to retain the benefit of Notification No. 203/1992-Cus. dated 19.05.1992.

Analysis: The licences had been transferred by the original exporters with due authorisation by the competent authority. In the absence of any allegation of forgery or falsification of the licences or their transfer, the presumption was that the authority had satisfied itself regarding compliance with the notification conditions. The obligation to establish non-availment of Modvat credit on the exported goods lay on the original licence holder and not on the transferee. The demand could not be sustained by placing on the appellant an impossible burden to prove the conduct of the transferor, and the cited precedent supported this position.

Conclusion: The transferee was not liable to prove non-availment of Modvat credit by the original exporter, and the denial of exemption was unsustainable. The appeal was allowed in favour of the assessee.

Ratio Decidendi: Where an advance licence is validly transferred, the transferee cannot be saddled with the burden of proving that the original exporter did not avail credit, unless the Revenue establishes a legal basis for denial of the exemption.

---