By TIOL News Service

CHENNAI, FEB 10, 2016: THE appellant purchased DEBP Licences in open market through broker and used them for import of goods. Investigations revealed that the Licences were forged and Show Cause Notice was issued. The Adjudicating Authority confirmed duty demand and imposed penalties. The appellant filed appeal before the Tribunal. The Tribunal remanded the matter to allow cross examination. The demand was again confirmed and on appeal the Tribunal allowed the appeal on limitation. Revenue filed ROM contending that the decision in case of Hico Enterprises relied on by the CESTAT was overruled by the Supreme Court. The ROM was allowed and the matter was restored before the CESTAT for fresh decision.

The Appellant contended that the Supreme Court in the case of CC (Imports), Bombay Vs Hico Enterprises - 2008-TIOL-246-SC-CUS upheld the Larger Bench decision of the Tribunal 2005-TIOL-1100-CESTAT-MUM-LB. They contended that the Supreme Court's order in the case of Hico Enterprises was passed by Three Judges Bench whereas the Apex Court's order in the case of Aafloat Textiles comprised of Two Judges Bench. There are two Apex court orders on the identical issue. The Judgement rendered by Three Judges Bench will prevail over Two Judges Bench. In this regard, the appellant relied on State of U.P. Vs Ram Chandra Trivedi - (1976) 4 SCC 52.

After hearing both sides, the Tribunal held:

++ The Tribunal's Larger Bench in Hico Enterprises case held that transferee cannot be called upon to fulfil the condition of the notification. This case is distinguishable and not applicable in view of the Supreme Court's later judgement in the case of Commissioner of Customs Vs Aafloat Textiles (India) Pvt. Ltd. - 2009-TIOL-42-SC-CUS wherein the Apex Court has dealt the issue in detail and settled the issue in favour of Revenue.

++ Further, the Supreme Court in a recent decision in the case of TISCO Vs CC Mumbai on identical issue of fraud committed by the original licence holder, the Apex Court upheld the Tribunal's order confirming the demand on TISCO who is the transferee of such licence.

++ By respectfully following the apex court judgement in the case of Afloat Textiles (India) Pvt. Ltd. and TISCO and the Tribunal's decision in the case of Sharman Woollen Mills Ltd. Vs CC Amritsar, it is held that in the present case the goods were cleared by the appellant by forged/fake DEPB licences and forged TRAs and the demand of duty under Section 28(1) of the Customs Act, 1962 is liable to be upheld.

(See 2016-TIOL-381-CESTAT-MAD)