Limitation in customs duty demands cannot be extended against a transferee for the transferor's alleged misdeclaration.

A transferee of a transferable advance licence cannot be fastened with extended-period customs demand and penalty merely because the transferor allegedly misdeclared facts. Once the licensing authority endorses transferability, the transferee imports on the strength of that endorsement, and the duty to disclose relevant facts remains with the person who made the misdeclaration. On that reasoning, the extended limitation under section 28 was unavailable against the transferee, and the demand was held barred by limitation and unsustainable.

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Issues: Whether the demand of customs duty and penalty raised against the transferee of a transferable advance licence was barred by limitation, where the alleged misdeclaration was attributable to the transferor and not to the transferee.

Analysis: The transferability of an advance licence is endorsed by the licensing authority after satisfaction that the original holder has discharged the required burden. A transferee imports on the strength of that endorsement. In such a situation, the basis for invoking the extended period under section 28 cannot be fastened on the transferee merely because the transferor allegedly made a misrepresentation. The liability to disclose the relevant facts rests on the person who made the misdeclaration.

Conclusion: The demand was barred by limitation and could not be sustained against the transferee.

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