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2016 (9) TMI 722 - PUNJAB & HARYANA HIGH COURT

2016 (9) TMI 722 - PUNJAB & HARYANA HIGH COURT - 2016 (340) E.L.T. 625 (P & H) - Cancellation of DEPB issued - withdrawal of benefits availed on the basis of DEPB - demand of customs duty and SAD - confiscation under section 111 of the Customs Act, 1962 - option to pay redemption fine of ₹ 1,00,000/- under section 125 of the Customs Act, 1962 - principle of "buyer be ware" - whether duty can be demanded from an importer who is not a party to fraud committed by an exporter ? - Held that: - .....

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party to the fraud with the seller of DEPB. DEPB was found to be a genuine document, though obtained by seller by producing some forged documents, to which the appellant was not a party - duty not demanded from the buyer - appeal allowed - decided in favor of appellant. - CUSAP No. 13 of 2014 (O&M) - Dated:- 7-9-2016 - Rajesh Bindal And Harinder Singh Sidhu, JJ. Mr. Jagmohan Bansal, Advocate for the appellant Mr. Sharan Sethi, Advocate, Mr. Amit Goyal for the respondent ORDER Rajesh Bindal J. 1 .....

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porter who is not a party to fraud committed by an exporter ? (b) Whether demand against the appellant is sustainable when demand against identically situated persons has already been dropped ? (c) Whether extended period of limitation can be invoked, in view of various judgments of this Hon'ble Court ? (d) Whether impugned order is perverse and contrary to record ? 4. Learned counsel for the appellant submitted that the appellant purchased one DEPB scrip No. 3010006203 dated 10.10.2000 from .....

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f that DEPB. The contention of the appellant is that when DEPB was purchased by it and the date on which it was utilised for payment of duty, it was a valid scrip, hence, the appellant cannot be made liable for any action. The department may take action against the person, who got DEPB issued by submitting forged documents. The adjudicating authority confirmed the demand. The order was upheld in appeal by the first appellate authority as well as the Tribunal. 5. While referring to the order pass .....

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rter. He further submitted that on the basis of the aforesaid finding recorded in favour of the appellant, penalty was set aside. In case, the appellant had been afforded opportunity of hearing before cancellation of DEPB granted to the person, from whom he had purchased, the appellant could have raised legal issues to defend the case as ultimately on account of cancellation of DEPB, which was issued to a third party, from whom the appellant had purchased the same, the appellant cannot be made t .....

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2009-Commissioner of Customs (Preventive) Amritsar v. M/s Deebee Marketing Pvt. Ltd., decided on 21.4.2009 and M/s Gheru Lal Bal Chand v. State of Haryana and another, 2011(4) PLR 440, it was submitted that in case the benefit under DEPB purchased by a person for consideration had been utilised before it was cancelled, the importer cannot be made liable for any action. Action can be taken against the person who committed fraud. He further submitted that in the case of the appellant, DEPB itself .....

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be raised by the appellant were considered therein and it was opined that buyer of DEPB from the person who had obtained the same by submitting forged documents, is also liable. Earlier order passed by this court in Munjal Showa Limited v. Commissioner of Customs and Central Excise (Delhi (IV), Faridabad, 2009 (246) ELT 18 (P&H) was referred to, where on the principle of buyer be ware , purchaser of DEPB was held liable as it was his duty to ascertain whether the scrip being purchased by it .....

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s, Jalandhar. It was utilised to discharge duty liability on the goods imported by the appellant vide Bill of Entries dated 12.10.2000 and 19.10.2000. More than one year thereafter, Director General of Foreign Trade cancelled DEPB issued to M/s Beni Exports, Jalandhar vide order dated 24.10.2001. As a result thereof, the appellant was issued show cause notice dated 14.11.2002 for withdrawing the benefits already availed of on the basis of DEPB purchased by the appellant. After considering the re .....

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s imposed in lieu of confiscation. Personal penalty on the appellant was also imposed. In appeal filed by the appellant against the aforesaid order before the Commissioner (Appeals), the demand of duty was confirmed, however, penalty was set aside. The Commissioner (Appeals), while setting aside the penalty, recorded the following findings: As regards to imposition of penalty of ₹ 4,85,453/- and ₹ 30,000/- on the appellant No. 1 and 2 under Section 114A and Section 112 of the Act res .....

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e Tribunal opined that the appeals were liable to be dismissed applying the principle of buyer be ware . However, another Member opined that the appeal filed by the assessee was required to be allowed, whereas the revenue's appeal was meritless. The matter was referred to be considered by third Member on difference of opinion. After the matter was considered by third Member, the appeal filed by the appellant as well as the department were rejected. The department was raising the issue regard .....

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ves Ltd.'s case (supra). There also, similar findings were recorded. 11. The same view was later followed in Fertichem India and M/s Deebee Marketing Pvt. Ltd.'s cases (supra). 12. The judgment of this Court in Munjal Showa Limited's case (supra) is distinguishable on facts as in that case, transfer release advices issued against DEPB scrip were forged and even DEPBs were also forged. There was no finding recorded by the Tribunal or the authorities in that case that the assessee acte .....

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nds Trading Co.'s case 1 (supra), the assessee's appeal was dismissed while relying upon the earlier judgment of this court in Munjal Showa Limited's case (supra) specifically noticing that the Tribunal in that case had recorded a finding that bonafides had not been established by the assessee, hence, the assessee was not entitled to place reliance upon the judgment of this court in Leader Valves Ltd.'s case (supra). In Friends Trading Co. v. Union of India, 2010 (254) ELT 652 (P .....

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eeks to verify this from the office issuing the scrip. However, it is not possible in a case where the scrip is genuine, but for the purpose of issuance thereof, the party concerned may have used some forged documents. 15. A similar issue was considered by a Division Bench of this Court in M/s Gheru Lal Bal Chand's case (supra). It was a case, where under Haryana Value Added Tax Act, 2003, a purchasing dealer is entitled to get input tax credit on production of a statutory form. The claim wa .....

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f plea of fraud, collusion or connivance between the parties. Relevant paras thereof are extracted below: 25. In legal jurisprudence, the liability can be fastened on a person who either acts fraudulently or has been a party to the collusion or connivance with the offender. However, law nowhere envisages to impose any penalty either directly or vicariously where a person is not connected with any such event or an act. Law cannot envisage an almost impossible eventuality. The onus upon the assess .....

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would be difficult to hold the law to be valid on the touchstone of articles 14 and 19 of the Constitution of India. 26. The rule of interpretation requires that such meaning should be assigned to the provision which would make the provision of the Act effective and advance the purpose of the Act. This should be done wherever possible without doing any violence to the language of the provision. For Subsequent orders see CUSAP-14-2014 A statute has to be read in such a manner so as to do justice .....

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