TMI Blog2004 (1) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... der :- (1) M/s. De-Nocil Corp. 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 including the cited case laws, we order as follows :- (i) M/s. De-Nocil shall make a pre-deposit of Rs. 50 Lakhs towards duty and furnish a Bank Guarantee for the balance duty within 8 weeks fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... low 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 features of the D.E.P.B. scheme as operated under the aforesaid Customs exemption Notification and the relevant Exim Policy are the following :- (a) Duty exemption under the scheme is available against export of goods. (b) The exemption is to be availed by debiting credits which is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 withholding imports made by transferees of R.E.P. licences acquired fraudulently cannot be applied for grant of customs duty exemption under Notification No. 34/97, dated 7-4-1997 issued in the context of D.E.P.B. Scheme. 8.Shri Hitesh Shah, learned SDR has cited the decision of ICI India Ltd. v. C.C., Calcutta - 2003 (151) E.L.T. 336 which has been rendered in the context of imports under fake D.E.P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice 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 shipping documents and bank remittance papers. In view of the Apex Court decisions in :- (i) Nova Pan India Ltd. v. CCE, Hyderabad - 1994 (73) E.L.T. 769 (S.C.) = 1994 (54) ECR 505 (S.C.), and (ii) Rajasthan Spinning and Weaving Mill v. CCE - 1995 (77) E.L.T. 474 (S.C.) = 1995 (58) ECR 569 (S.C.), we are of the view that the conditions of the exemption Notification No. 34/97- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Bank officials in the grant of such D.E.P.B.s issued on the basis of fraudulent shipping documents and Bank remittance papers and subsequent grant of duty exemption of a huge amount at the time of clearance of the impugned imported goods. We also note that this is not an isolated case as there are other similar cases cited in paragraph 3 above. Shri Prakash Shah, the learned Advocate for M/s. De-Nocil had infact argued that duty exemption should be allowed since the D.G.F.T. and Customs officials had issued the D.E.P.B. and had failed to verify the authenticity of shipping documents and Bank remittance papers. We are of the view that such action and omission on the part of defaulting individual D.G.F.T. officials and Custom officials cannot be a ground for extending duty exemption when the conditions of the exemption notification issued in public interest are not met. Public exchequer cannot be allowed to be defrauded merely because some officials have either been negligent or collusive in their acts or omissions. At the same time, we are of the firm view that the acts and omissions of the concerned D.G.F.T., Customs and Bank officials resulting in loss of customs duty shou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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