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TaxTMI 
TaxTMI 
TaxTMI 
2024 (9) TMI 511
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....P/K/2145479 dated 19.07.1994 and P/K/3491011 dated 31.03.1995 in respect of M/s Lark Chemicals Pvt. Ltd., and No. P/K/2145480 dated 19.07.1994 in respect of M/s Micro Labs. Ltd., from the original license holder namely M/s Robinson Impex (1) Ltd. (hereinafter referred to as 'M/s Robinson') (earlier known as M/s Jyoti Exports (1) Ltd.). The said VABAL licenses were issued to M/s Robinson in terms of Notification No. 203/92-Cus. dated 19.05.1992 read with the provisions of Export & Import Policy, 1992-1997. 2.2 On the basis of information received by Customs authorities informing them that certain merchant exporters based in Ahmedabad are misusing VABAL scheme by exorbitantly over invoicing their exports, thereby claiming duty free benefits on imports in collusion with manufacturers, search operations were conducted on various premises and certain incriminating documents were recovered pertaining to exports. 2.3 On further investigation by the Customs authorities, it was found that M/s Robinson had resorted to over-valuation of the exported goods to avail higher/undue VABAL benefit. M/s Robinson procured the exported goods for Rs.1,33,64,004/- from different manufacturers o....
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....transferable and other conditions of the notification do not apply to the transferee. Therefore, the benefit of Notification would be available to the transferee as held by the Tribunal in the case of Goodluck Industries Ltd. Vs. Commissioner of Customs, Kolkata- 1999 (108) E.L.T. 818 (Tribunal). This decision has been affirmed by the Hon'ble Supreme Court in [200 (120) E.L.T. A66 (SC)]. This view has also been approved by the Supreme Court in Jindal Dye Intermediate Ltd. Vs. Collector of Customs, Mumbai - 2006 (197) E.L.T. 471 (SC). 4.3 He further submitted that learned adjudicating authority had placed reliance on Sravani Impex P Ltd.- 2010(252) E.L.T. 19(A.P.), wherein it was held that when the DEPB scrips have been sold to third parties, the only course open to the Customs is to demand repayment of DEPB Credit from the original licensee-exporter under Section 28 of the Customs Act 1962. Learned Advocate further supported his stand that duty cannot be demanded from the transferees, by claiming that this position was perhaps recognized by the Government when it introduced Section 28 AAA in the Customs Act with effect from 28.05.2012. Section 28AAA provides that in such cases dut....
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....sion taken in Tata Hitachi Construction Machinery Company Ltd. [2015 (319) E.L.T. 546 (S.C.)], the appellants/transferees are liable to pay duty along with interest. 6. Heard both sides and perused the records of the case. Further, the arguments advanced by learned Advocate and learned Authorized Representative of the Department have been considered by us. We have also perused the additional written submissions given in the form of paper books. 7. The issue in dispute is to decide whether the denial of benefit of Value Based Advance Licenses (VABAL) to the appellants-transferee of such Licenses is permissible? and whether recovery of customs duty under Section 28 ibid, which was foregone on import on utilizing the VABAL Licenses, that were alleged to have been obtained by the transferor M/s. Robinson by resorting to overvaluation; and whether penalty imposed on the appellants under Section 114A ibid, are legally sustainable or not? 8.1 In the impugned order, the learned Commissioner had examined the various issues involved in the case as referred above and confirmed the adjudged demands on the appellants as well as imposed penalty on them. 8.2 In arriving at the conclusions for....
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....hearing or rebutted the charges leveled against them in the Show Cause Notice. Many other noticees, viz. the manufacturers of the said goods, the receiver of the goods, the commission agents and their Directors / Partners have contended that they had no role in the subject exports and thus, were not liable for penal action at all. Some have raised the issue of jurisdiction also. The importers have added that they were the genuine and bona fide buyers of the licences in usual course of business against a consideration. Some noticees have initially raised the question of non-receipt of relevant documents - relied as well as non-relied which were later provided to them as per the records and therefore, that issue has been taken care of and does not call for any further discussion. xxx xxx xxx xxx 6.8.1 M/s Lark Chemicals Pvt. Ltd have raised the specific issue that in one of their licences Advance Licence No. P/K/2145479 dated 19.07.1994 for US$180000, the SCN was issued and later proceedings dropped vide an Order-in-Original No. CAO/No.117/97- CAC/CC-1 dated 19.05.1997 on the issue of availability of Notn No. 203/92; that the Order had attained finality; and that without c....
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....s his predecessor. If the extended period of limitation could be invoked against the original holder of fraudulently obtained Advance Licence, the same could be invoked against successor or purchaser. It finds support from the case of Friends Trading Co. vs Union of India reported in 2011 (267) E.L.T. 33 (P & H) wherein it is held that:-.... xxx xxx xxx xxx 6.14 Therefore, in view of the foregoing, I confirm the duty on all importers and the import duty is recoverable from the importers of the goods viz. M/s Robinson Impex (1) Ltd, M/s Micro Labs Ltd., Bangalore, M/s Romit International, Mumbai, M/s Milind Associates, Madras, M/s Robinson Pharma, Ahmedabad and M/s Lark Chemicals, Mumbai to the extent the duty exemption was availed by them along with the applicable interest. 6.15 Having discussed as above, I conclude that M/s Robinson Impex (1) Ltd have acquired VABAL Licence fraudulently by way of suppressing/ mis-stating the correct value of goods exported and accordingly, has rendered the export goods liable for confiscation under Section 113 (d) of the Customs Act 1962. M/s Robinson Impex (1) Ltd themselves and the other importers, viz. M/s Micro Labs Ltd., Bangalore, M/s....
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....1996clarifying the position. For ease of reference, the said circular is reproduced below: "Circular No. 23/96-Cus., dated 19-4-1996 F. No. 605/96-DBK Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs Subject: VBAL - Over valuation of import in Advance Licence application. Commissioner of Customs, Bombay has informed that in a number of cases the exporters while applying for Value Based Licences often state inflated unit prices in the application in order to obtain a licence for a higher CIF value so long as they are able to meet the value addition prescribed. The licences so obtained are, subsequently used for importing inputs at prevailing international prices with the result that quantities far in excess of requirements for export production, based on which the entitlement to CIF was calculated, can be imported. Thus, in addition to the flexibility permitted under the scheme for importing any one or more inputs upto full CIF value of licence except for sensitive items, the exporters through above modus operandi take unintended benefits under the Scheme. 2. In terms of Rule 2(1) of the Foreign Trade (Regulati....
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....f the quantities mentioned in the license. 9.3 We further find from the records that in terms of the above instructions of CBEC, the reference enquiry was made by jurisdictional customs authorities vide their letter dated 24.11.1997 to the jurisdictional DGFT authorities. To this enquiry, the Deputy Director General of Foreign Trade, Office of the Joint DGFT, Ahmedabad vide their reply letter in File No. 08/F-8/12/ECA/GEN/AM-97 dated 22.12.1997, had informed the status of the three licenses involved in the present appeals, along with some other licenses, in the following manner: (i) License No. P/K/2145479 dated 19.07.1994 - File No. of the JDGFT is "429-am95" and status is "BCW/Transferability allowed..." (ii) License No. P/K/2145480 dated 19.07.1994 - File No. of the JDGFT is "42..-am95" and status is "BCW/Transferability allowed..." (iii) License No. P/K/491011 dated 31.03.1995 - File No. of the JDGFT is "1854-am95" and status is "File to be trace out position will be intimated later on." It is also found that such reply of DGFT authorities covered 44 licenses dealing with four different license holders including M/s Robinson. Some of the licenses have been shown with th....
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....ous components which would be used in the manufacture. Undoubtedly, while applying for a license, the appellants set out the components they would use and their value. However, the value was only an estimate. It is not the respondents' case that the components were not used. The only case is that the value which had been indicated in the application was very large whereas what was actually spent was a paltry amount. To be noted that the licensing authority having taken no steps to cancel the licence. The licensing authority have not claimed that there was any misrepresentation. Once an advance license was issued and not questioned by the licensing authority, the Customs authorities cannot refuse exemption on an allegation that there was misrepresentation. If there was any misrepresentation, it was for the licensing authority to take steps in that behalf." 10. Therefore, following the ratio of the various decisions relied upon by the appellants, we find that the Commissioner of Customs has no jurisdiction to question Value Based Advance License whether such license was obtained by misrepresentation or otherwise as has been held by the Supreme Court in the above cited cases. 11....
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....titioners were not covered under Chapter 39 of ITC (HS) classification. Whether an item falls under Chapter 39 of ITC classification or not is for the licensing authorities to consider before issuing the licence. Even after the issuance of the licences, the licensing authorities have not taken any steps to declare that the said licences were wrongly issued. Once the licensing authorities have held that the export product is covered under the DEPB Scheme and have issued the DEPB licence, it is not open to the Customs authorities to hold that the said export product is not covered under the DEPB Scheme." 5.7 In light of the above circular and the decisions referred above it was for Customs Authorities after noting the mismatch in the declared unit value on Bill of Entry and that arrived on the basis of quantity and value mentioned in Value Based Advance Licence to refer the matter to licensing authority and seek corrections. In absence of any correction/amendments in the licence, the value of imported goods sought to be exempted by the said licence cannot be suo motu altered by the Customs Authorities. In our view order of Commissioner (Appeals) and adjudicating authority is not o....
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.... doubt that, by the general rules of law there is no warranty of quality arising from the bare contract of sale of goods, and that where there has been no fraud, a buyer who has not obtained an express warranty, takes all risk of defect in the goods, unless there are circumstances beyond the mere fact of sale from which a warranty may be implied. {Bottomley v. Bannister, [1932] 1 KB 458 : Ward v. Hobbs, 4 App Cas 13}. (Latin for Lawyers)" 26. No one ought in ignorance to buy that which is the right of another. The buyer according to the maxim has to be cautious, as the risk is his and not that of the seller. 27. Whether the buyer had made any enquiry as to the genuineness of the license within his special knowledge. He has to establish that he made enquiry and took requisite precautions to find out about the genuineness of the SIL which he was purchasing. If he has not done that consequences have to follow. These aspects do not appear to have been considered by the CESTAT in coming to the abrupt conclusion that even if one or all the respondents had knowledge that the SIL was forged or fake that was not sufficient to hold that there was no omission of commission on his part s....
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....xtracted below: "5. After hearing both the sides duly represented by Shri Mohan Jaikar, ld. Advocate and Shri S.M. Tata, ld. SDR, we find that the Hon'ble Supreme Court in the case of Union of India v. Sampatraj Dugar [1992 (58) E.L.T. 163 (S.C.)] has held that cancellation of Import Licence cannot be held to be retrospective and cannot be pressed into service when the same was valid at the time of importation of the goods. To the similar effect is another decision of the Hon'ble Supreme Court in the case of Collector of Customs, Bombay v. Sneha Sales Corporation [2000 (121) E.L.T. 577 (S.C.)] laying down that Import licence having been cancelled after import and clearance of goods, import cannot be said to be in contravention of the provisions of Imports and Exports (Control) Act, 1947. In the case of Taparia Overseas (P) Ltd. v. Union of India [2003 (161) E.L.T. 47 (Bom.)] it was held that transfer of licence to transferee for value without notice of fraud by original licence holder is governed by common law and not by provisions of any statute. As such, transaction cannot be held to be void ab initio but voidable at the instance of party defraud. The Hon'ble Court observed tha....
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....e. It was held that goods were liable in confiscation under Section 111 of the Act. The Tribunal allowed the appeal by respondent holding the demand to be barred by limitation. The High Court upheld the view. 3. In this appeal challenge is to the aforesaid conclusions. Learned counsel for the respondent pointed out that no role was ascribed to it in the show cause notice. 4. It is seen that in view of the fact that in the show cause notices, there was no reference to the alleged infraction of M/s. Parker Industries, the transferor of the license in question. The judgments of the CESTAT and the High Court do not suffer from any infirmity to warrant interference. It is to be noted that in Commissioner of Customs (Import) Bombay v. M/s. HICO Enterprises [2008 (11) SCC 720] similar view was taken. The appeal is dismissed." 10.4 We further that in the case of Hico Enterprises (supra), the Larger Bench of the Tribunal has held that benefit of notification cannot be denied to the transferee on the ground of breach of conditions of the notification. The relevant paragraphs of the said order are given below: "42. As seen from the material on record, the Duty Exemption Scheme, w....