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2013 (5) TMI 383 - AT - Customs


Issues Involved:
1. Use of false and fabricated Telegraphic Release Advice (TRA) by importers.
2. Legitimacy of DEPB scrips and their acquisition.
3. Liability of traders, brokers, and sub-brokers in the fraudulent use of DEPB scrips.
4. Applicability of penalties and duty recovery.
5. Impact of Settlement Commission's orders on non-parties.
6. Timeliness of adjudications under the Customs Act, 1962.

Detailed Analysis:

1. Use of False and Fabricated TRA:
The investigation revealed that importers used false, fake, forged, and fabricated TRAs to clear goods duty-free, causing revenue loss. The TRAs indicated DEPB scrips not transferred by the original owners, and no genuine TRAs were issued by Mumbai Customs to Chennai Customs.

2. Legitimacy of DEPB Scrips and Their Acquisition:
The DEPB scheme aimed to neutralize customs duty on import content of export products. However, the investigation found that the DEPB scrips used were not legitimately acquired from the original exporters. Importers failed to verify the genuineness of the scrips, leading to fraudulent use.

3. Liability of Traders, Brokers, and Sub-brokers:
Traders, brokers, and sub-brokers were found to be instrumental in trading fake, false, forged, and fabricated TRAs. Key individuals like Sashi Prakash Lohia and Satish Mohan Agarwal played pivotal roles in this fraudulent activity, supplying these instruments to importers.

4. Applicability of Penalties and Duty Recovery:
The Tribunal upheld the penalties and duty recovery against importers and intermediaries. It emphasized that fraud nullifies all transactions and that the appellants failed to establish bona fide acquisition of DEPB scrips. The extended period for duty recovery under Section 28 of the Customs Act, 1962, was justified due to the fraudulent nature of the transactions.

5. Impact of Settlement Commission's Orders on Non-parties:
The Tribunal held that orders of the Settlement Commission, which provided immunity to some importers, did not bind the Tribunal in granting relief to traders, brokers, and sub-brokers who were not before the Commission. Fraudulent actions cannot be shielded by the principle of finality of litigation.

6. Timeliness of Adjudications:
The adjudications were not time-barred as fraud nullifies all legal protections. The Tribunal cited various judgments to support the stance that fraud unravels all transactions and extends the limitation period for adjudication.

Conclusion:
The Tribunal dismissed all 67 appeals except for setting aside and reducing penalties in some cases. It emphasized the need for disciplinary action against negligent officials and ordered a full investigation by the DG (Vigilance), CBEC. The Tribunal affirmed the duty and interest demands against importers and upheld penalties against key fraudsters while reducing penalties for some intermediaries. The decision underscored the seriousness of fraud and the necessity of safeguarding public revenue.

 

 

 

 

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