Transferable advance licence: extended customs limitation cannot be used against a transferee for the transferer's alleged default.

A transferee-importer using a transferable advance licence, duly endorsed as transferable by the licensing authority, cannot be fastened with duty demand and penalty on the basis of alleged non-fulfilment or misrepresentation by the transferer alone. Where the importer purchased the licence openly and the adjudicating authority does not address the transferee's lack of knowledge of any earlier contravention, the extended limitation under Section 28 of the Customs Act is not available against the transferee on that ground. The demand and penalty therefore do not survive against the transferee-importer.

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Issues: Whether duty demand and penalty against a transferee-importer using a transferable advance licence could be sustained by invoking limitation under Section 28 of the Customs Act, where the alleged contravention related to the transferer and the licensing authority had endorsed transferability.

Analysis: The transferee had imported goods on the strength of a licence whose transferability had been endorsed by the licensing authority. The demand was founded on alleged prior non-fulfilment by the transferer, while the adjudicating authority did not deal with the transferee's plea that it had purchased the licence openly and was unaware of any earlier contravention. Applying the earlier tribunal view that the burden under Section 28 could not be placed on the ultimate importer when the alleged misdeclaration was by another person, the extended period could not be invoked against the transferee.

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

Final Conclusion: The appeal was allowed and the duty demand and penalty did not survive, with consequential relief.

Ratio Decidendi: Where a transferable licence has been validly endorsed by the licensing authority, and the alleged default or misrepresentation is attributable to the transferer rather than the transferee-importer, the extended limitation under Section 28 of the Customs Act cannot be invoked against the transferee on that basis alone.

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