2026-VIL-249-CESTAT-MUM-CU
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CUSTOMS CESTAT Cases

Customs - Cancellation of duty credit scrips/licenses obtained by fraud, Duty-free import by bonafide transferee - Whether the goods imported by the appellants, as bonafide transferees of the valid and subsisting duty credit scrips/licenses, would be liable for denial of duty exemption on the ground that the original license holder had obtained the scrips/licenses fraudulently – HELD - Even if the scrips/licenses were obtained by the original licensees through fraud or forged documents, as long as they were valid and subsisting at the time of import by the appellants, the subsequent cancellation of the scrips/licenses would not affect the prior import activity of the bonafide transferees - A license/scrip obtained by fraud is not void ab-initio but merely voidable. If the license/scrip was obtained for valuable consideration by the transferee without any notice of fraud, the concept of "fraud vitiating everything" would not apply. The cancellation of the scrips after the imports had been made would not have any impact, as at the time of import, the scrips were valid - In the case in hand, the appellants had purchased the scrips/licenses from the persons, who were recognized by the licensing authorities as the exporter of the goods and upon subjective verification, the same were issued in their favour by the competent authorities. Thus, under such circumstances, even if the said documents were obtained by the main beneficiary by adopting to the fraudulent means or practices, it cannot be questioned at the stage of the ultimate beneficiary, who had purchased such document duly issued by the competent authority and utilized the same for duty free importation of goods - the impugned orders are set aside and the appeals are allowed in favour of the appellants
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