Per Ms. Archana Wadhwa:
1. After hearing both the sides duly represented by Shri Sudhir Malhotra, ld. Advocate appearing for the respondent and Ms. Renu Jagdev, ld. AR appearing for the Revenue, I find that the appellant imported goods on 30.08.2000 and 30.09.2000 under the claim of benefit of Notification No.34/97 in terms of DEPB scrip purchased by them from one Beni Exports.
2. During the course of investigation, it came to light that Beni Export has procured the said DEPB scrip on the strength of forged/substituted shipping bills. Accordingly DEPB scrip were cancelled ab-initio by the Joint Director of Foreign Trade on 24.10.01.3. By the time, the DEPB scrip were cancelled, the import had already taken place. In view of the above, proceedings were initiated against the appellant by way of issuance of Show Cause Notice (SCN) dtd. 31.10.02 proposing confirmation of demand of duty of Rs.1,29,089/- on the ground that imports stand made on the basis of DEPB scrip which were procured fraudulently by the original exporter and which stands subsequently cancelled by DGFT, India.
4. The said SCN was adjudicated by the original adjudicating authority who vide his order dtd. 11.11.05 confirmed the duty of Rs.1,29,089/- along with interest. However, as regards penalty the adjudicating authority has observed as under :-
“Penal action has also been proposed against noticee No.1. I find that there is nothing on records that noticee No.1 in any manner abetted or connived in the fraudulent action of noticee No.2. Even in show cause notice there is no allegation to this effect. Noticee No.1 was a bonafide purchaser of freely transferable DEPB scrip and did not know the fraudulent action of noticee No.2, the proposal to levy penalty under section 112/114/A of Customs Act, 1962 against noticee No.1 cannot be sustained in law
5. The said order of the original adjudicating authority was upheld by Commissioner (Appeals).
6. The main contention of the appellant is that in view of the clear findings that the appellant was not a party to the fraudulent action of the exporter, the extended period of limitation cannot be invaded against them. Ld. Advocate has also submitted that in as much as the import had taken place much earlier to the cancellation of DEPB scrip, when the same were valid in the eyes of law, the demand cannot be held sustainable in view of law declared by the Larger Bench of the Tribunal in the case of Hiko Enterprises reported in 2005(89) ELT139(Tri.) which stands confirmed by the Hon’ble Supreme Court. Ld. Advocate has made reliance on the following decisions :-
i) Khanna Paper Mills Ltd. reported in 2011(273) ELT149 (Tri.) held that valid DEPB scrip used for import of goods no reason for demand of duty or confiscation or imposition of penalties.
ii) Binani Cements Ltd. reported in 2008(231) ELT177 (Tri.) held that importer purchased DEPB licence for consideration and imported goods thereunder prior to cancellation of such licence for having been procured fraudulently by exporter/transferor no allegation of any misstatement or suppression of facts against importer extended period of invokable.
iii) DSM Anti-Infectives India Ltd. reported in 2009(246)ELT648(Tri.) held that bonafide purchaser of freely transferable DEPB scrip, not knowing that they were obtained fraudulently by transferor in absence of collusion or misstatement on part of purchaser extended period cannot be invoked against purchaser.
7. After hearing ld. AR appearing for the Revenue, I find that there is no dispute on the facts. Admittedly the export had taken place when the DEPT scrip were not cancelled by the DGFT and were still valid in the eyes of law. There is also no finding of any aiding and abating Beni Export by the appellant. The portion of the order of the adjudicating authority dropping the proposal to impose penalty does not stand appealed against by the Revenue. As such by applying the ratio of law declared in the above mentioned decisions, I hold that the demand, having been raised by invoking the longer period of limitation is not sustainable. The same is accordingly set aside on the above ground and appeal allowed with consequential relief to the appellants.