Per S.S. Sekhon :

Appellants had imported in 1994 certain goods and availed the DEEC notification exemption from payment of duty since they held a valid DEEC Import licence as transferee. In 1999 a show cause notice was issued proposing to deny the benefit of exemption availed and granted on the grounds of an allegation made in the show cause notice that an incorrect declaration was made as regards MODVAT availment on inputs used in the manufacture of products exported while in fact such benefit was availed. Consequently duty free benefit on the said DEEC import licence produced by this transferee was held to be not available. Duty was therefore confirmed jointly and severally on the licence-holder and the transferee and the penalties under Section 112 (a) of the Customs Act, 1962 were imposed on both i.e. licence-holder Rs. 3 lakhs and transferee Rs. 1 lakh. Transferee is in appeal in this case.

2. After hearing both sides and considering the issue, it is found :

a) There are two views held by the orders of this Tribunal Bench as regards the eligibility to the benefit of the Custom Exemption notification in such matters. While one set of case decided by the Tribunal as in the case of Good Luck Industries, 1999 (108) ELT 818 upheld by Supreme Court as reported in 2000 (120) ELTA66and followed in many decisions by the Tribunal (See Plastchem Industries, 2000 (120) ELT 775, Avni DyechemIndustries, 2001 (46) RLT481 (CEGAT-Mum.)=2001 (137) ELT1316 and2001 (138) ELT 786 and 2001 (46) RLT 791 (CEGAT-Ban.)=2001 (138) ELT 787 would grant the exemption to a transferee, while the other view as held in the case of Special Steels Ltd., 2004 (60) RLT213 (CESTAT-Mum.)=2004 (163) ELT242 and Cosper Impex Pvt. Ltd., 2003 (56) RLT 465 would lead to a view that even the impossibility of performance of satisfying the MODVAT not availed condition by a recognized and valid Transferee would not entitle them to the benefit of the legal maxim LEX NON COGIT AD IMPOSSIBILIA and following CC (Mumbai) Vs. Bharat Pulverising Mills Ltd., 1999 (32) RLT 322 (CEGAT)=1999 (111) ELT 193 (T) benefit of exemption should be denied even if DGFT authorities have allowed the transfer, since the scheme is not compulsory and no one is compelled to obtain the transfer and suppression and fraudulent mis-declaration made before Public Authorities (i.e. DGFT) would be a cause to deny the Custom notification benefits.

b) Since there are two diametric opposite views prevailing in application of the liability as regards the conditions of the said DEEC notification, it would be a fit case to refer the following question of law for resolution by the Larger Bench of the Tribunal. The question is :