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TMI Blog2012 (6) TMI 344X X X X Extracts X X X X X X X X Extracts X X X X ..... rip was obtained by fraud by Beni Exports. On 24-10-2001, DGFT Ludhiana cancelled the said DEPB scrip. 3. The short point in dispute is whether the duty forgone by the department on imports made by the Appellant using the said fraudulent DEPB scrip can be demanded and recovered from the Appellant. The Commissioner (Appeal) has waived the penalty imposed on the importer. Revenue has challenged such waiver. 4. The arguments on behalf of the Appellant are that they purchased the DEPB scrip in good faith against payment of consideration and utilized it under the bonafide belief that the license did not have any blemish. It is also emphasized that on the date of import of the goods the DEPB scrip was valid. It is argued that for recovery of short paid customs duty, Notice has to be issued under section 28 of the Customs Act within 6 months from the relevant date and the period can be extended only if the Appellant had done any fraud. Since no fraud on the part of the Appellant is alleged it is argued that the extended period cannot be invoked and hence the demand is time barred. 5. It is argued by the ld. Advocate that the decision of the Tribunal in the case of ICI India Limited Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the case of Sona Casting (Supra). DEPB scripts were obtained on the basis of fraudulent documents. The script was cancelled by DGFT only after import of the goods by the transferee of the license. Further demand was invoking the extanded period of the years. 9. The case of East India Commercial Co. Ltd is the earliest of the cases quoted by the Counsel for Appellant. This case was under the old Sea Customs Act, 1878. Further it was about violation of post import condition that the goods should have been used by the importer himself, that is the goods should not have been sold. So this decision is not relevant to the facts of present case. The present position in the matter is quite different because of section 111(o) of Customs Act 1962 and the decision of Apex Court in CC Vs. Jagdish Cancer and Research Center 2001 (132) E.L.T . 257 (S.C.) and that of Bombay High Court in CC Vs WOCKHARDT HOSPITAL & HEART INST.-2006 (200) E.L.T . 15 ( Bom .) . 10. The second decision namely that in CG Vs. Sneha Sales Corporation, the matter was similar to the facts of the case at hand but with the difference that the license was for permitting imports and not a license authorizing exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsferee. In the cases of Ajay Kumar and that of Leader Valves (supra) the Apex Court held that extended period cannot be invoked against the transferee. In the case of Aafloat Textiles and Friends Trading (Supra), the Apex Court took a contrary view. The latter decisions of the Apex Court are later decisions. Thus there has been a change in the approach of the Apex Court. We are bound by the views of the latest decisions of the Apex Court in this regard. 17. However we notice that the Honorable High Court of Punjab and Haryana has held in the case of The Mall Amritsar V. M/s Parkar Industries Jalandhar-2007 (207) ELT 658 and in the case of Friends Trading Co. Supra held that in such situations it is not proper to impose penalty on the transferee who imported the goods. We respectfully follow these decisions. So the Appeals filed by Revenue are rejected. 18. Therefore all the four Appeals are rejected. (Pronounced in open court on ...............) ( Archana Wadhwa ) Member (J) (Mathew John) Member (T) Per: Archana Wadhwa : 19. After having gone through the order proposed by my learned Brother, though I agree with him that the appeals filed by the Revenue are to be rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under the law and proceed against the exporter, who procured the licence by mis-representing the facts. It stands observed by the Larger Bench that inasmuch as the transferability is granted by DGFT only after the export obligation is discharged by the licence holder in terms of DEEC scheme / notification including the satisfaction of the condition that exporter / licence holder has not availed the modvat credit on inputs, the transferee of the licences , who purchased the same from the open market and get the transfer endorsement from DGFT , can legally presume that export obligation had been fulfilled without availing of inputs credit and satisfying the condition of the notifications. Accordingly, it was held that assuming that the original licence holder has committed fraud and obtained transferability by misrepresentation even then the rights created by the licence in favour of the importer is valid. Such a transaction is voidable and not void ab initio. Accordingly, it was held that the legal maxim LEX NON COGIT AD IMPOSSIBILIA can be invoked and transferee cannot be called upon to reverse the benefits availed under the licence on the ground that original licence holder has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed the transfer of the same, a bonafide purchaser in the market cannot be held liable to bear the consequences of the lapses on the part of the DGFT . It cannot be out of place to mention here that the difference between a forged licence and the licence procured on the basis of mis representation is the same as the difference between a fake Rs.500 note or Rs.1000 note and genuine note transferred by the holder by making some mis-representation. Where as the fake Rs.500 /-note would mean as if there is no money in the hands of possessor of the same, the original Rs.500 /-note that was procured by misrepresentation would result in the possessor's right to use the same. At this point, I also take note of the Tribunal's decision in the case of Ajay Kumar & Co. vs. CC [2006 ( 205 ) ELT 747 (Tri-Del)] laying down that DEPB scrips procured by the original allottee by fraud but valid at the time of import by transferee, would not result in denial of the benefit of the same even when the same are subsequently cancelled by the authorities. The said decision of the Tribunal was upheld by the Hon'ble Supreme Court when the appeal filed by the Revenue was rejected, as reported in 2009 (92) RL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the above proposition, I again refer to the Tribunal's decision in the case of Ajay Kumar Co. as upheld by Hon'ble Supreme Court, referred in the preceded paragraph. Reference is also being made to the Tribunal's decision in the case of CC vs. Binani Cement Ltd. [2008 (231) ELT 171 (Tri-Ahmd )] wherein it was held as under :- "5. After considering the above statements, I find that the duty demand was made against the respondent under the provisions of Section 28(1) of the Customs Act which allows invocation of longer period in case of collusion, wilful misstatement or suppression of facts. The above circumstances should be present qua the importer i.e. the person against whom the demand is being made and not against the exporter i.e. the person who has procured the DEPB passbook and transferred the same to the importer against consideration. As such, I am of the view that setting aside of demand on the point of limitation by Commissioner (Appeals) is legal and proper." 26. The said decision of the Tribunal was upheld by the Hon'ble High Court of Gujarat as . For better appreciation I reproduce para 6, 7 and 8 of the High Court's decision :- 6. In fact, in Paragraph No. 4 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning of proviso to section 28. The said judgement of Hon'ble Punjab & Haryana High Court stands confirmed by the Hon'ble Supreme Court when the appeal filed by the Revenue was rejected, as reported in [2007 (227) ELT A 29 (SC)] . A reference to another decision of Punjab and Haryana High Court case can be made in the case of CC, Amritsar Vs. Deebee Marketing Pvt. Ltd. as and another judgement of Punjab and Haryana High Court in the case of CC, Amritsar vs. M/s. Fertichem India vide their order dated 27.1.2009 in Customs Appeal No. 23/2006 . In the case of Kamani Oil Industries vs. CC, New Delhi as reported in [2006 (196) ELT 21 (Tri-Del)] , the Tribunal while dealing with the Revenue's contention observed that reference of suppression or mis-statement under the proviso to Section 28 to importer or exporter can only be to the import or exporter of the consignment which is liable to duty and not to the other exporters or other importers. 28. A reference at this stage may be made to the Tribunal's decision in the case of Binani Cement Ltd. There was originally difference of opinion between the two Members as regards the merits of the case as also on the point of limitation. The d ..... 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