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TaxTMI 
TaxTMI 
TaxTMI 
2022 (9) TMI 445
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....in respect of WP.Nos.20056, 24937, 24938 of 2007 & 29866 of 2008 directing that the proceedings may go on but a final order not be passed. This benefit was not extended to the petitioner in W.P.No.24936 of 2007 and hence the authorities have proceeded to pass an order, that came to be contested by the petitioner before the appellate authorities. 3. Ultimately, an order has come to be passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in favour of the petitioner on 11.01.2018. With this, W.P.No.34936 of 2007 is rendered infructuous and the same is dismissed as such. No appeal appears to have been filed by the revenue challenging the aforesaid order and hence the same is stated to have attained finality. 4. As far as remaining WP.Nos.20056, 24937, 24938 of 2007 & 29866 of 2008 are concerned, the relevant facts necessary to consider and decide the issues are as follows: (i) The petitioner had purchased duty entitlement passbooks (DEPB) from various entities from open market. The purchase was through its customs house agents. (ii) The purchase was bonafide, in the sense that the parties are unrelated and there is no allegation in regard to....
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....are required to take note of any suspicious circumstances that would cast a cloud on the issuance of the scrips itself. 6. Thus, the issuance of the scrips to the original vendors would itself tantamount to a presumption that the validity of the scrips had been fortified and found to be acceptable by the authorities. Furthermore, the scrips are valid for a period of twelve months only and in the present case the impugned orders in original have all been passed after the expiry of twelve months. Thus, an order passed as against an invalid scrip would itself lose all force. 7. That apart, the show cause notices have been issued long past the relevant date, being the date of importation by the petitioner. An assessment is required to be made two years from the relevant date, that is, the date of the transaction in question. An extended period of five years is provided in those cases where the conditions set out in the proviso to Section 28A (1) are satisfied, being suppression, collusion or misrepresentation. In the present case, there is no allegation to this effect and hence, the impugned proceedings are vitiated on this ground as well. 8. Per contra, Mr.V.Chandrasekaran, l....
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.... the FOB value so arrived. The DEPB shall be initially issued with non-transferable endorsement in such cases where realisation has not taken place to enable the exporter to effect import for his own use. However, upon receipt of realisation, the DEPB shall be endorsed transferable. In such cases where the applicant applies for DEPB after realisation, the DEPB shall be issued with transferable endorsement. 13. The procedure makes it clear that once an application is received for grant of credit under DEPB, a scrip is initially issued as a non-transferable endorsement. This is to ensure that the authorities satisfy themselves that the release of the sales proceeds have, in fact, been received. 14.It is only upon confirmation of receipt of export realisations that the scrip shall be endorsed to be non-transferable. This is what has transpired in the present case as well. Admittedly and undoubtedly, in my considered view, there is a presumption that the officer endorsing the scrips to be transferable would and should have satisfied himself that the conditions precedent to issuance of the scrips are in order. The endorsement of transferability was made only after such sa....
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.... years to take action under Section 28 rather than six months as in other cases. 18. To my mind, there is no doubt on the position that the requirement of collusion or willful misstatement and suppression of facts is required to be satisfied by the respondent Department qua the noticee, that is, the petitioner. In the instant case, while the notice is issued to the importer that is subsequent purchaser, the allegation of collusion, willful misstatement and suppression of facts is made only qua the original vendor. Thus, the proceedings are, in my view, barred by limitation. 19. That apart, to my mind, this is a case where the Department has missed the bus. The presumption which is apparent from a reading of Article 7.38 of the Handbook would make it clear that there is a burden cast upon the respondent to fully apply his mind and satisfy himself prior to issuance or endorsing scrips as transferable. If there is an error committed by the authority at that juncture, then the gravity and the burden of that error has to be borne by the Department and cannot be passed on to a subsequent purchaser. In fact, the SCNs issued reveal that action has also been proposed as against named ....
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....87 (SC) (ii) M/s.Friends Trading Co. V. The Union of India and others (2011 SCC Online P & H 1985) (iii) ICI India Limited V. Commissioner of Customs (Port), Calcutta &Ors. (2004 SCC Online Cal 560) (iv) Golden Tools International V. Joint DGFT, Ludhiana (2005 SCC Online P & H 1372) (v) Munjal Showa Ltd. V. Commr. Of C.Ex. (Delhi - IV), Faridabad (2008 SCC Online P & H 2155) (vi) Commissioner of Customs, Kandla V. M/s. Essar Oil Limited & others (2004 (11) SCC 364) 24. The first judgment in the case of Aafloat Textiles (supra) authored by Justice Arijit Pasayat (as he then was) confirms an order passed by the Customs, Excise and Service Taxes Appellate Tribunal (Mumbai) (CESTAT). The challenge was on the ground that the scrips themselves stood vitiated since they had been forged. Thus the very substratum of the transaction fails and in such a case, the benefit of extended limitation must be available to the Department. 25. The Bench examined the question of fraud, noticing that fraud constitutes an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a cheating intended to g....
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....t appears that a document is a forged one or a manufactured one, it is concocted or a created one in the eye of law and it is in the eye of law a non-existent document. On the other hand, a document issued in the context of a fraud or misrepresentation, is by itself a genuine document and according to settled law, such document is, at the most, voidable and is valid till it is set aside. A transaction that takes place on the basis of such document is good one and can even give a good title to the holder in due course for valuable consideration. At this juncture, we may profitably refer to the observations of the Supreme Court made in the case of CCE v. Decent Dyeing Co., reported in (1990) 1 SCC 180 wherein, the Supreme Court held that it would be intolerable if the purchasers were required to ascertain whether excise duty had already been paid as they had no means of knowing it. It was further pointed out that duty of excise is primarily a duty levied on a manufacturer or purchaser in respect of a commodity manufactured or produced. As pointed out by a Division Bench of this Court in the case of Commissioner of Central Excise v. D.P. Singh reported in 2011 (270) E.L.T. 321, the ju....
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.... indicated in the documents accompanying the goods, has been paid. The Explanation added to Rule 7(2) even describes the instances which are the reasonable steps. The Appellants in these cases, however, not having taken those steps, cannot get the benefit of the credit even though he is not party to fraud. In this connection, we fully agree with the views taken in the case of Sheela Dyeing (supra), and hold that the said decision supports the case of the Revenue and taking of all reasonable steps as provided in Rule 7(2) is an essential condition of availing the credit. The distinction sought to be made by Mr. Parikh that the period involved therein related to June, 2003 is not tenable because sub-rule (e) of Rule 7 was introduced even earlier with effect from April 1, 2003. 48. The next question is whether demand of reversal is barred by the period of limitation. In our opinion, in view of our above finding that if the original document is issued even by practising fraud, a holder in due course for valuable consideration unless shown to be a party to a fraud, cannot be proceeded with by taking aid of a larger period of limitation as indicated in Section 11A(1) of the Act.....
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....ich have a bearing on the order of remand and cannot canvass all the findings of facts arrived at by the lower appellate Court. The Supreme Court further held that it was quite safe to adopt that an appeal under Order 43 Rule (1) clause (u) should be heard only on the grounds enumerated in Section 100 of the Code. 52.1.1 In the case before us, as the Tribunal below committed substantial error of law in overlooking the fact that the provisions of limitation stood in the way of reopening of transaction on the ground of fraud as the appellants were not even alleged to be parties to the fraud, and this is a question which goes to the root of the jurisdiction, and thus, the error committed by the Tribunal amounted to substantial question of law. The decision relied upon by the Revenue, therefore, cannot have any application to the facts of the present case. 30. To summarize, the test laid out was whether the subsequent purchaser had been found to have played a part in the original transaction. In the instant case, the scrip had been obtained on the strength of a forged Bank Realisation Certificate (BRC). However, while the scrip itself stands vitiated, the Department had cle....