TaxTMI 
TaxTMI 
2012 (11) TMI 266
X X X X Extracts X X X X
X X X X Extracts X X X X
....Foreign Trade, from whose office DEPB scrips had been issued, cancelled the same. Since by that time the goods imported against these scrips by the respondent had already been cleared by them, the respondent were issued show cause notices along with M/s. ATM International for recovery of duty payable on the goods and which had not been paid, under provisions of Section 28(1) of Customs Act, 1962, along with interest on it under Section 28AB ibid. The show cause notices were issued by invoking extended period under proviso to Section 28(1) of Customs Act, 1962. The show cause notices were adjudicated by the Joint Commissioner vide Order-in-Original No. 6/JC/05 dated 26-10-2005 and 09/JC/CUS/05 dated 22-11-2005 by which - (a) duty demands of Rs. 1,91,619/- and Rs. 1,51,961/- respectively were confirmed against the respondent along with interest under proviso to Section 28(1) of Customs Act, 1962 read with Section 28AB ibid; and (b) penalty of Rs. 1,90,000/- and Rs. 1,50,000/- respectively was imposed under Section 112 of the Customs Act, 1962 on M/s. ATM International, Jalandhar; and (c) While penalty wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uty exemption can be availed against the same and if it has been wrongly availed, right of public exchequer can not be allowed to lapse merely because the respondent who utilized the DEPB scrips, did same on bona fide belief - and duty exemption availed on an invalid and ab initio cancelled the DEPB scrips is liable to be recovered; (d) In view of the judgment of the Apex Court in the case of Commissioner of Customs, Mumbai v. Jagdish Cancer & Research Centre reported in 2001 (132) E.L.T. 257 (S.C.), the limitation period under Section 28(1) of Customs Act, 1962 would not be attracted for recovery of duty. Shri Gupta, ld. DR, therefore, pleaded that the impugned orders-in-appeal passed by the Commissioner (Appeals) are not correct. 3. None appeared for the Respondent. Since notice of hearing had been sent to the respondent neither anybody appeared for the respondent nor there is any request for adjournment, in accordance with Rule 21 of the CESTAT (Procedure) Rules, so far as the respondent are concerned, the matter is being decided ex parte. 4. We have carefully considered the submissions made by the learned Departmental Representative and have....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... availed the benefit. Merely because at a later stage, the DEPB has been found to be fabricated and fake on the basis of BCER, the assessee-respondent could not be deprived of the benefits which were legitimately available to them. It is also worth noticing that the assessee-respondent was never issued any show cause notice before cancelling the DEPB which was obtained by M/s. Parker Industries and obviously the notice was also to be issued to them alone. We are further of the view that notice under Section 28 of the Customs Act could not be issued to the assessee-respondent because a period of six months stipulated by Section 28 of the Customs Act stood already expired and the rights of the parties had been crystalised. The revenue cannot avail the extended period because the assessee-respondent could not be accused of misrepresentation, collusion or suppression of the facts within the meaning of proviso postulated by Section 28 of the Customs Act. Therefore, there is no merit in this appeal." 5.1 The Apex Court in the case of M/s. East India Commercial Company Ltd. v. Collector of Customs (supra) relied upon by Hon'ble Punjab & Haryana High Court in its above mentioned ju....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ontrol) Order, 1955 read with Imports and Exports (Control) Act, 1947. We are unable to accept this contention of the learned counsel in view of the law laid down by this Court in East India Commercial Company Ltd. v. Collector of Customs, Calcutta (supra) wherein this Court has said :- "Nor there is any legal basis for the contention that licence obtained by misrepresentation makes the licence hones, with the result that the goods should be deemed to have been imported without licence in contravention of the order issued under S.3 of the Act so as to bring the case within clause (8) of s. 167 of the Sea Customs Act. Assuming that the principles of law of contract apply to the issue of a licence under the Act, a licence obtained by fraud is only voidable; it is good till avoided in the manner prescribed by law. " 5. In the aforementioned decision of this Court it has been clearly laid down that in a case where the licence is obtained by misrepresentation or fraud it is not rendered non est as a result of its cancellation so as to result in the goods that were imported on the basis of the said licences as being treated as goods imported without a licence in contravention ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re are exceptions to this principle. This general principle and the exceptions are provided in Section 29 of the Sale of Goods Act, 1930. Section 29 of the Sale of Goods Act reads as under :- "29. Sale by person in possession under voidable contract. - When the seller of goods has obtained possession thereof under a contract voidable under Section 19 or Section 19A of the Indian Contract Act, 1872 (9 of 1872), but the contract has not been rescinded at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of the seller's defect of title." Reference may also be made to the commentary on Sale of Goods by P.S. Atiyah, 8th Edition wherein it has been stated as under : "The great practical importance of this rule is that, if a person buys goods by fraud and disposes of them before the other party avoids the contract, a buyer in good faith from the fraudulent party acquires a good title." (b) The principle contained in Section 29 of the Sale of Goods Act will apply to the present case since licence has been held to be goods by Supreme Court in Vikas Sales Corporation v. CCT - 1996 (4) SCC 433. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ustoms authorities. In such circumstances, it is observed that the Customs authorities were wrong in not accepting the licence and goods were not liable to duty entitling the petitioner to claim refund of duty paid under protest. 33. Where transfer has been effected without notice to the transferee of alleged fraud, the concept of fraud vitiate everything is not applicable as licence was transferred for value arising out of importable transaction governed by any law." 5.3.1 This judgment of the Tribunal has been affirmed by the Apex Court vide judgment reported in 2008 (228) E.L.T. 161 (S.C.). 5.4 In our view, the ratio of the above mentioned judgments of the Apex Court and Larger Bench of the Tribunal is squarely applicable to the facts of this case. 6. In case of Friends Trading Co. v. UOI reported in 2010 (254) E.L.T. 652 (P & H), cited by the Revenue, DEPB scrips against which duty free import had been made by them, had been purchased by them from the original holder M/s. Parks Industries. Subsequent to imports, the DEPB scrips were cancelled by the DGFT on the ground that the same had been obtained by M/s. Parks Industries fraudulently by produc....