2007 (3) TMI 500 - AT - Customs

Penalty imposed u/s 112 - Confiscated goods imported under forged DEPB licences - HELD THAT - It would, however, appear to us that penalty u/s 112 of the Act could not have been imposed in lieu of confiscation of the goods. It is only when the importers are asked to pay fine in lieu of confiscation, that such amount of fine is to be mentioned in accordance with Section 125 of the said Act. We accordingly set aside the penalties imposed in lieu of confiscation under the orders-in-original at Item No. 1, while confirming the penalties imposed under Item No. 7 in Order-in-Original (which is the subject matter of Appeal) and also the penalties under Item No. 6 in all the other Orders-in-Original, which are the subject matter of the other appeals. Subject to this modification, the impugned Orders of Commissioner (A) are set aside and the orders-in-original in all these cases stand restored against the respondents. All the appeals are accordingly allowed.

Summary

Issues:
- Confiscation of goods imported under forged DEPB licenses
- Recovery of customs duty with interest and SAD
- Imposition of penalties under Section 112 of the Customs Act, 1962

Confiscation of Goods Imported Under Forged DEPB Licenses:
The appeals were directed against the Commissioner (Appeals)'s order setting aside the orders-in-original where goods imported under forged DEPB licenses were confiscated. The investigation revealed that the DEPB licenses were forged, leading to show cause notices to the importers. The evidence provided, including letters from the Deputy Director General of Foreign Trade, confirmed that the licenses were not issued by the DGFT, rendering them void ab initio. Previous legal precedents established that forged DEPB licenses have no legal effect, and no benefits can be derived from them. The Tribunal upheld this position, emphasizing that the Commissioner was not justified in overturning the original orders.

Recovery of Customs Duty and Imposition of Penalties:
The importers were penalized twice under Section 112 of the Act in the orders-in-original. However, it was noted that penalties under Section 112 could not be imposed in lieu of confiscation of goods. The correct procedure required fines to be imposed in such cases, as per Section 125 of the Act. Consequently, the penalties imposed in lieu of confiscation were set aside, while penalties under other items in the orders-in-original were confirmed. The Tribunal allowed the appeals, restoring the original orders against the respondents.

This judgment highlights the serious consequences of using forged DEPB licenses for importing goods, emphasizing the nullity of such documents and the legal implications for importers. It also clarifies the appropriate penalty imposition procedure under the Customs Act, ensuring compliance with statutory provisions.