TaxTMI 
TaxTMI 
2024 (9) TMI 511
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....ased Advance Licenses (VABAL) viz., No. 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.....
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....ransferee is that the license should have been made 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.....
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....raudulently and sold the same in the market. In view of the above, he submitted that on the basis of the decision 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....
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....ssion of their reply to the SCN. However, in spite of being granted enough time and opportunities of hearing to them, they had not attended the 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-Or....
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....Even if case of criminal liability or penalty may stand on different footing, purchaser or successor of fraudulently obtained Advance Licence stands in the same position as 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 ex....
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.... in licensee or the quantity mentioned in the license. 9.1 In this regard, we find that Central Board of Excise and Customs (CBEC) had issued the Circular No. 23/96-Customs dated 19.04.1996clarifying 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....
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....ld be referred to the concerned licensing authority for taking corrective action. (iv) The said circular does not direct the Customs Authorities to suo motu deny the exemption available under the said license in term of value in respect of non-sensitive goods on the basis of 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 31.0....
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.... as under : "As regards the contention that the appellants were not entitled to the benefit of the exemption notification as they had misrepresented to the licensing authority, it was fairly admitted that there was no requirement, for issuance of a licence, that an applicant set out the quantity or value of the indigenous 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." ....
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.... when the DEPB licence is issued by the Licensing authorities specifically holding that the petitioners are entitled to avail the benefit of the DEPB Scheme in respect of Polypropylene filter plates and accessories, the Customs authorities were, not justified, in rejecting the claim of the petitioners on the ground that the Articles exported by the petitioners 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 mention....
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....generally bound to view the land and to enquire after and inspect the title - deeds; at his peril if he does not. 25. Upon a sale of goods the general rule with regard to their nature or quality is caveat emptor, so that in the absence of fraud, the buyer has no remedy against the seller for any defect in the goods not covered by some condition or warranty, expressed or implied. It is beyond all 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....
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....e further action of cancellation of license etc. have been initiated. 10.3 Further, we also find that in the case of Ajay Kumar & Co (supra), the Tribunal vide order dated 18.04.2006 have held that if the scrips/licenses were valid at the time of import, then subsequent cancellation of the same on the ground of fraud etc. will not have bearing on the transferee appellant. The relevant paragraphs of the said order of the Tribunal is extracted 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 provisi....
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.... By show cause notices dated 30-5-2002, 12-6-2002 and 26-7-2002 appellant was called upon to show cause why an amount of Rs. 12,45,174/- could not be recovered and demanded in terms of proviso to Section 28(1) of the Customs Act, 1962 (in short the 'Act'). Noticee denied the allegations. However, Commissioner of Customs, Amritsar confirmed the demand along with interest and penalty. Same was held to be jointly payable by the original license holder and licensee. 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 Comm....