TaxTMI 
TaxTMI 
2004 (1) TMI 230
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....rp. Protection Ltd. : (i) Duty : Rs. 1,09,70,956/- of which Rs. 4,49,262/- has been paid. (ii) Interest under Section 28AB : Not quantified. (iii) Penalty : Rs. 1,09,70,956/-. (2) Shri P.K. Srinivas : Penalty Rs. 10,00,000/-. (3) Shri R.C. Jain : Penalty Rs. 20,00,000/-. (4) Shri Kirit Srimankar : Penalty Rs. 10,00,000/-. (5) Shri Bharat K. Shah : Penalty Rs. 10,00,000/-. Our order on these stay applications and the reasons for our order are as follows :- Order 2.After grant of several adjournments, we have heard at length the learned Advocates for the appellants and the learned SDR. We particularly appreciate the detailed arguments by the learned advocate Shri Prakash Shah and the learned SDR Shri Hitesh Shah, who have taken us through various aspects of the case, the legal provisions and the case laws. After carefully considering all the arguments and perusing the case records incl....
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....ent of Revenue (through the Customs Department) and the Department of Commerce (through the D.G.F.T.). The main objective of these schemes is promotion of exports against receipt of foreign exchange. These schemes either allow drawback/rebate of duty paid on inputs used in the export product or allow import of such inputs duty free. In this case, we are concerned with the Duty Exemption Pass Book (D.E.P.B.) scheme. Under this scheme, a Duty Exemption Pass Book is issued to an exporter with provisional credits for utilising towards payment of duty on imported goods to be used in the export product. The relevant Notification No. 34/97-Cus., dated 7-4-1997 contains several conditions, one of the important conditions binds the importer to pay duty along with 24% interest p.a. if there is failure to make export. 5.The scheme also permits prior exports against which D.E.P.B. is issued containing credits at the rates notified for the relevant export product. Such credits can be utilized by the exporter himself or the D.E.P.B. with credits can be transferred by sale and the transferee can pay duty on goods imported by him utilizing the credit from the transferred D.E.P.B. The main feature....
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....portability of goods under R.E.P. licences issued under Exim Policy relating to 1985-88. In the said case, the main challenge was to 'the action of the Revenue withholding the clearance of the goods described as "Polyester Filament Yarn" imported by the petitioners under the licences acquired and held by them as transferees for value without notice of the alleged frauds' as recorded in the very first paragraph of the said decision of the Hon'ble High Court. However, in the present case, there is no dispute relating to clearance of goods under any licence. The D.E.P.B. scheme is primarily concerned with grant of duty benefit subject to export taking place and the amount of duty benefit is linked to the notified rates for relevant export product which is based on the duty on the inputs used in such export product. D.E.P.B. is not a licence, it is a mere pass book showing credit of duty earned on export which can be utilised for paying duty on imported goods. In case, the imported goods required licence for import, the same has to be obtained separately. As such, we are of the prima facie view that the cited decision of the Hon'ble Bombay High Court rendered in the context of withhold....
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....es that apart from the transferers being fictitious and non-existent, the transfer of the D.E.P.B.s in violation of the Exim Policy, which is now part of the law, amounts to a legal fraud. 11.Shri Prakash Shah, the learned Advocate also advanced the argument that there are two sets of Show Cause Notices and that even though the first set of notices was within the time limit, the second notice was issued beyond the normal time limit of six months which invoked liability to penalty and interest. We are of the prima facie view that the extended time limit under Section 28 of the Customs Act, 1962 is applicable since the said Section refers to "collusion or any wilful mis-statement or suppression of facts by the importer or the exporter or the agent or employee of the importer or exporter". Moreover, we note that the duty demands were issued under the first set of notices within the time limit and there is no time limit prescribed for initiating penal action under the Act. 12.We are thus of the prima facie view that the impugned goods are liable to pay duty even though the transferee who was imported the impugned goods may not have a role in obtaining the D.E.P.B.s by forging shippin....