Cus – Appellants were bonafide transferee of DEPB scrip with no involvement in the forgery or fraud before DGFT – no penalty imposable – ROM allowed: CESTAT
By TIOL News Service
MUMBAI, APRIL 26, 2017: ARECTIFICATION of mistake application has been filed in respect of CESTAT Order dated 17.10.2016 [2016-TIOL-3419-CESTAT-MUM].
The applicant argued that the Apex Court in an identical matter in the case of CC vs. Vallabh Design Products – 2016-TIOL-246-SC-CUS has upheld the decision of the Punjab & Haryana High Court in the case of CC, Amritsar vs. Vallabh Design Products – 2007-TIOL-842-HC-P&H-CUS .
Inasmuch as in the said case also DEPB scrips were obtained on the basis of forged documents and the appellants were the bona fide transferee of the said scrips. Nonetheless, the High Court had concluded that the assessee-respondent admittedly was not a party to the fraud and there is a categorical finding that it had purchased DEPB from the open market in the bonafide belief of it being genuine; that they had paid the full price and availed the benefit.
The applicant also submitted that a five-Member Bench of the Tribunal in the case of Hindustan Lever Ltd - 2006-TIOL-1111-CESTAT-MUM-LB had held –
| Notwithstanding what may have been done by any authority below the Supreme Court, when the Supreme Court pronounces on the true position of law, any decision rendered by any other authority contrary to that is required to be regarded as an error which is apparent on the record and rectification of such an error within the period permissible under the law and in accordance with the provisions of the statute was clearly required to be effected. |
It is further pointed out that during the hearing on 27.9.2016the AR had stated that the decision of the Tribunal in the case of Alpha Chemie Sapthagiri in appeal No. C/1122/04 - 2016-TIOL-2504-CESTAT-MUM has been challenged by filing of a rectification of mistake application but the said statement is factually incorrect and no ROM has been filed.
The AR while resisting the present application stated that he would find out the status of the ROM filed against the decision of the Tribunal in the case of Alpha Chemie Sapthagiri and report soon.
The Bench extracted the decision of the Punjab & Haryana High Court as upheld by the apex court and inter alia observed –
+ We find that the decision of the Hon'ble Punjab & Haryana High Court has been passed in similar circumstances as the decision of the Tribunal dated 17.10.2016 in respect of which the rectification of mistake application has been filed. In both the cases, the DEPB scrip was obtained fraudulently by forging documents before DGFT. In both the cases, the appellants were bona fide transferee of the said scrips with no involvement in the forgery or fraud before DGFT.
+ In these circumstances, it is apparent that the decision dated 17.10.2016 is at variance with the decision of the Hon'ble Supreme Court in the case of Vallabh Design Products.
After adverting to the Larger Bench decision in the case of Hindustan Lever Ltd. (supra), the CESTAT further observed -
“7. From the said decision, it is apparent that a rectification of mistake application can be entertained in the case the apex court has laid down a law, even if the said decision is subsequent to the decision in which the rectification of mistake application has been filed. Though it has to be within a reasonable period. It is seen that the decision of the apex court reported in 2016 (341) ELT A222 (SC) = 2016-TIOL-246-SC-CUS published on 28.11.2016.
8. We find that the statement that ROM has been filed against the decision of the Tribunal in the case of Alpha Chemie Sapthagiri in appeal No. C/1122/04 has not been substantiated by learned AR. It is seen that in the order dated 17.10.2016, no reliance was placed on the decision of the Tribunal in the case of Alpha Chemie Sapthagiri solely on the ground that a rectification of mistake application has been filed. Since learned AR has not been able to produce any rectification of mistake application, it is apparent that there has been a mistake in the order dated 17.10.2016."
Following the decision of the apex Court in the case of Vallabh Design Products (supra), the ROM was allowed.
Consequently, the Tribunal order dated 17.10.2016 is modified and the appeal was allowed.
(See 2017-TIOL-1398-CESTAT-MUM)
