Advance licence transferee cannot be denied customs exemption for impossible compliance with Condition V(a), with duty and penalty unsustainable.

A transferee of an advance licence could not be denied Notification No. 203/92-Cus. benefit for alleged non-fulfilment of Condition V(a) where the condition concerned non-availment of input stage credit by the original licensee. Applying lex non cogit ad impossibilia, the transferee was not required to satisfy a condition that could not be performed by it, and the obligation remained with the original licensee. On that basis, duty demand, confiscation and penalty against the transferee were held unsustainable because breach of Condition V(a) could not be attributed to the transferee of the advance licence.

---

---

Issues: Whether a transferee of an advance licence could be denied the benefit of Notification No. 203/92-Cus. for alleged non-fulfilment of Condition V(a), and whether duty, confiscation and penalty could be imposed on the transferee on the basis of alleged availment of input stage credit by the original licensee.

Analysis: The Larger Bench had already answered the referred questions in favour of the appellant and held that the maxim lex non cogit ad impossibilia applied to a valid transferee of the advance licence. On that basis, the transferee could not be compelled to satisfy Condition V(a), which related to non-availment of input stage credit under Rule 56A or Rule 57A of the Central Excise Rules, 1944 in respect of the exported finished goods. The liability to satisfy that condition lay on the original licensee, and the transferee could not be treated as having violated it where compliance was impossible for the transferee.

Conclusion: Duty demand, confiscation and penalty against the appellant were not sustainable, as breach of Condition V(a) could not be attributed to the transferee of the advance licence.

---