TAXAP/1592/2007 1/5 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 1592 of 2007 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA HONOURABLE MS.JUSTICE H.N.DEVANI ========================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================= COMMISSIONER OF CUSTOMS Versus BINANI CEMENT LTD. ========================================= Appearance : MR HARIN P RAVAL for the Appellant None for Opponent(s) : 1, ========================================= CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI Date : 10/07/2008 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA) TAXAP/1592/2007 2/5 JUDGMENT 1. Commissioner of Customs, Kandla, Gandhidham has preferred this appeal by proposing following two questions stated to be questions of law. [a] Whether in the facts and circumstances of the case, Tribunal is justified in confirming the decision of the Commissioner [Appeals], who set aside the demand of duty on the ground that the Revenue had not attributed misstatement or suppression of fact despite having asserted fraud committed by the exporter resulting in clearance of imported goods without payment of duty? [b] Whether in the facts and circumstances of the case, the Tribunal was justified in holding that though the case involved fraud committed by the exporter resulting in clearance of imported goods without payment of duty by the importer, Revenue is not entitled to recover the customs duty? 2. The appellant is aggrieved by the order dated 23.3.2007 made by the Customs, Excise and Service Tax Appellate Tribunal (the Tribunal). The relevant facts as stated by the appellant in the memorandum of present appeal read as under: “3.1 One M/s Beni Exports had obtained DEPB license in 2000 of the value of Rs.94,56,252/-. On investigations, it was revealed that the said license was obtained by manipulating the export documents and by committing fraud and therefore, the result of the investigation was reported to the TAXAP/1592/2007 3/5 JUDGMENT Director General of Foreign Trade [DGFT] who cancelled the License vide order dated 24.10.2001. In the meantime, M/s Beni Exports had transferred the DEPB scrip No.3010005328 dated 22.8.2000 to the present respondent – M/s. Binani Cement who utilized the same to discharge the duty liability for importing goods vide bill of entry no.02978 dated 3.10.2000. That the goods imported against the aforesaid bill of entry were exempted from payment of duty subject to production of a valid DEPB License as per the Notification No.34/97- Cus dated 7.4.1997.” 3. According to the learned counsel for the appellant once the license was cancelled, it operated from the date of issue of license and therefore, any imports on the basis of such license were liable to duty. The respondent assessee had not paid such duty and was thus liable but the Tribunal had wrongly come to the conclusion that the respondent was not liable by holding that revenue was not entitled to invoke the extended period of limitation available under section 28 of the Customs Act, 1962 (the Act). That fraud vitiates every act and even if there may be no deliberate act on part of the respondent assessee in commission of fraud yet respondent assessee cannot escape liability to pay duty once the import was found to be on an invalid license. 4. Section 28 of the Act permits issuing of a notice to show cause and determination of the amount of duty or interest; and thereupon payment of duty by a person to whom a notice is served for either short levy of duty or non levy or erroneous refund and the period of limitation that is prescribed is six months. Proviso to section 28(1) of the Act carves out an exception and enlarges the period of limitation to a period of five years provided the non-levy, short levy etc. are by reason of collusion or TAXAP/1592/2007 4/5 JUDGMENT any willful misstatement or suppression of facts by importer or the exporter etc. 5. In the present case admittedly, respondent assessee is an importer who imported the goods vide bill of entry No.02978 dated 3.10.2000 on the basis of license dated 22.8.2000 which was transferred by the exporter in favour of respondent assessee. The said license came to be cancelled by the Director General of Foreign Trade vide order dated 24.10.2001. In light of these facts, both Commissioner (Appeals) and the Tribunal have concurrently found that there was no misrepresentation or suppression of facts as on the date of clearance of the imports in as much as the license was valid at the time of import. Accordingly, the demand based on an exercise within the larger period of limitation was not permissible as the same was barred by limitation. 6. In fact, in paragraph No.4 of the order of Tribunal, it is recorded “Revenue in their memo of appeal have not attributed any mis-statement or suppression of fact to the respondent herein. They have simply asserted that the case involved fraud committed by the exporter resulting in clearance of imported goods without payment of duty by importer and as such, Revenue should be allowed to recover the customs duty.” 7. In the aforesaid factual matrix after appreciation of evidence on record, the Tribunal has come to the conclusion that there is no collusion, willful misstatement or suppression of facts qua the importer namely the person against whom the demand is being made. The Tribunal has thus upheld the view expressed by the Commissioner (Appeals). 8. In light of the aforesaid facts and circumstances of the case, it is TAXAP/1592/2007 5/5 JUDGMENT apparent that there is no error in law committed by the Tribunal so as to warrant interference. No question of law, as proposed or otherwise, much less a substantial question of law can be said to be arising out of the impugned order of Tribunal. The appeal is accordingly dismissed. (D.A.MEHTA, J.) (HARSHA DEVANI, J.) shekhar/-