Purchaser of DEPB not involved in fraud cannot be deprived of legitimate benefits; duty recovery not valid without misrepresentation, collusion, or suppression of facts.

M.M.Kumar, J.

1. The revenue has filed three appeals namely CUSAP Nos. 14 , 15 and 17 of 2006 under Section 130(1) of the Customs Act , 1962 (for brevity #24;the Customs Act#25;) by challenging the order dated 5-5-2005 , 1-6-2005 and 27-4-2004 respectively passed by the Customs Excise and Service Tax Appellate Tribunal, New Delhi (for brevity the Tribunal). As common question of facts and law have been raised in all these appeals we decide them by a common order. The revenue has assailed the order passed by the Tribunal on the principal ground that once the Joint Director (General) of Foreign Trade had cancelled the Duty Exemption Pass Book which is commonly known as DEPB Scheme issued to M/s. Parker Industries 184 , Dilbagh Nagar , Jalandhar which order was upheld in appeal by the Additional Director General of Foreign Trade then the assessee- respondent who had purchased the DPEB from M/s. Parker Industries were not entitled to avail any benefit. For the sake of convenience , the facts are being referred from CUSAP No. 15 of 2006.

2. The Government of India in order to boost export had announced various concessions including exemption from payment of Central Excise duty , Customs duty and formulation of various schemes under the Import and Export Policy , known as EXIM Policy , which is formulated under Section 5 of the Foreign Trade (Development and Regulation) Act 1992 (for brevity #24;the Act#25;). DEPB is one of those schemes framed-under the EXIM policy which is in the nature of a licence to import material without payment of Customs duty and is in the form a pass-book. The pass book is issued against exports and fixed percentage of value of exports made is credited in the DEPB pass- book which is accounted for against the imports. According to the procedure an application for obtaining DEPB is made to the Joint Director General of Foreign Trade on a prescribed form accompanied by a bank certificate of exports and realisation of export proceedings in addition to other documents. The application for obtaining DEPB can be made even before realisation of export proceedings if the export proceedings are not realised within a period of six months or within the extended period then the DEPB holder is liable to pay an amount equal to DEPB availed along with interest at the rate of 24 per cent from the date of issue of DEPB till the date of deposit. It is further appropriate to mention that DEPB has been made saleable and the purchaser can avail the same benefits which could have been availed by the original exporter. The Duty Entitlement Pass-Book(s) Scheme reads as under :

#28;...Under this scheme the exporter is given duty entitlement at notified rates , which enable him to import inputs required for export production duty-free. He can also make use of this credit to import freely importable goods and or such credit can be transferred. The DEPB scrip is transferable scrip and it is regularly traded in the market. (d) That the main features of the DEPB scheme as operated under the Export Import Policy are the following :-

(i) Duty exemption under the scheme is available against export of goods. (ii) The exemption is to be availed by debiting credits , which is to be earned at the specific rate notified by DGFT for the relevant product which is exported. (iii) The DEPB credit is subject to realisation of export proceeds. If the export proceeds are not realised within six months or such extended period as allowed by R.B.I. , the D.E.P.B. Holder has to pay cash equivalent to the credit amount.#29;

3 The assessee-respondent No. 1 i.e. M/s. Leaders Valves Ltd. was a beneficiary of DEPB scrip No. P/L 3053128, dated 2-1-1998 which was transferred to it by M/s. Parker Industries Jalandhar. The later had obtained the afore-mentioned DEPB scrip fraudulently by forging Bank Certificate of Export Realisation (for brevity #24;the BCER#25;) purported to have been issued by Punjab and Sind Bank , Mota Singh Nagar , Jalandhar.