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2013 (10) TMI 1003 - AT - CustomsExport of mis-declared goods for obtaining undue DEPB credit - Confiscation of goods - Misdeclaration of description of the goods - Violation of Section 113(d) and 113(i) of the Customs Act, 1962 - Held that - If a party makes representations which he knows to be false and injury ensues therefrom although the motive from which the representations proceeded may not have been bad is considered to be fraud in the eyes of law. It is also well settled that misrepresentation itself amounts to fraud when that results in deceiving and leading a man into damage by willfully or recklessly causing him to believe on falsehood. Of course, innocent misrepresentation may give reason to claim relief against fraud. Fraud and justice do not dwell together for which penal provisions are enacted to eradicate evils of defrauding Revenue which is anti-social activity adversely affecting public revenue. Such provisions are construed in the manner which curbs the mischief, promote their object, prevent their subtle evasion and foil their artful circumvention. Thus construed, the term fraud within the meaning of these penal provisions is wide enough to take in its fold any one or series of unlawful acts committed or omissions made. An act of fraud on Revenue is always viewed seriously. Fraud and collusion vitiate even the most solemn proceedings in any civilized system of jurisprudence. It is a concept descriptive of human conduct either by letter or words, which includes the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. When material evidence gathered by Revenue remains uncontroverted, adjudication findings sustain. Accordingly appellants fail to succeeded on merit and on the fact and circumstances of the cases. It can unambiguously be held that there was deliberate misdeclaration of the description of goods exported and DEPB scrips were fraudulently obtained. Use of such non est scrips to discharge import duty against subsequent imports covered by the five appeals of the appellant company is recoverable with penal consequences of law - Following decision of COMMISSIONER OF CUSTOMS, KANDLA Versus ESSAR OIL LTD. 2004 (10) TMI 90 - SUPREME COURT OF INDIA - Decided partly against assessee.
Issues Involved:
1. Mis-declaration of exported goods. 2. Undue DEPB benefit gained. 3. Recovery of customs duty and interest. 4. Confiscation and fines in lieu of confiscation. 5. Penalties imposed on the appellant company and its Vice President. 6. Jurisdiction of customs authorities over DEPB issues. 7. Validity and retrospective application of subsequent amendments to DEPB schedule. 8. Allegations of fraud and misrepresentation. Detailed Analysis: Mis-declaration of Exported Goods: The appellant company was found to have exported VGA monitors while declaring them as CGA monitors in the shipping bills. This mis-declaration was established through various statements and technical data, including the specifications of the monitors and the number of pins used, which did not match CGA monitors but VGA monitors. Undue DEPB Benefit Gained: The appellant company gained undue DEPB benefits by mis-declaring the exported monitors. The DEPB benefits were disallowed as the exported monitors did not qualify for such benefits under the DEPB scheme. The investigation revealed that the company did not manufacture CGA monitors, which were eligible for DEPB benefits, but instead exported VGA monitors. Recovery of Customs Duty and Interest: Customs duty discharged using unduly gained DEPB scrips was ordered to be recovered under Section 28 of the Customs Act, 1962, along with interest under Section 28AB. The amount deposited by the appellant was appropriated towards the duty demand, and the remaining amount was ordered to be recovered by encashing the bank guarantee. Confiscation and Fines in Lieu of Confiscation: The exported VGA monitors were confiscated, and fines were imposed in lieu of confiscation since the goods had already left India. Similarly, goods imported using unlawfully obtained DEPB scrips were confiscated, and fines were imposed in lieu of confiscation. Penalties Imposed on the Appellant Company and Its Vice President: Penalties were imposed on the appellant company and its Vice President under Sections 112 and 114 of the Customs Act, 1962. The penalties were reduced to 40% for the company and 50% for the Vice President considering the circumstances of the case. Jurisdiction of Customs Authorities Over DEPB Issues: The appellant argued that customs authorities had no jurisdiction over DEPB issues, relying on various judgments. However, the tribunal held that customs authorities have the duty to curb evils of mis-declaration and protect revenue. The tribunal found that the customs authorities acted within their jurisdiction. Validity and Retrospective Application of Subsequent Amendments to DEPB Schedule: The appellant claimed that a subsequent amendment to the DEPB schedule should apply retrospectively. The tribunal rejected this argument, stating that the amendment cannot be applied retrospectively to grant benefits for past exports made with mis-declaration. Allegations of Fraud and Misrepresentation: The tribunal found that the appellant company made deliberate mis-declarations to gain undue DEPB benefits, amounting to fraud. The tribunal emphasized that fraud nullifies all transactions and judgments, and undue gains made at the cost of revenue must be restored. Findings and Order of Tribunal: The tribunal upheld the findings of the adjudicating authority, confirming the recovery of customs duty and interest, and the imposition of fines and penalties. The tribunal reduced the penalties imposed on the company and its Vice President. The appeals were partly allowed to the extent of the reduction in penalties. The tribunal reaffirmed that fraud and justice do not coexist, and any undue gain made through fraud must be rectified. Conclusion: The tribunal concluded that the appellant company deliberately mis-declared the description of exported goods to gain undue DEPB benefits. The customs authorities acted within their jurisdiction to recover the undue benefits and impose penalties. The appeals were partly allowed with a reduction in penalties, but the findings of fraud and misrepresentation were upheld.
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