2008 (1) TMI 878 - AT - Customs

Principle of jurisprudence - Fake and forged DEPB scrips - rebuttible evidence - whether there was collusion or fraud in the issue of the DEPB scrips becomes absolutely immaterial and irrelevant since no credit can be derived from a forged DEPB?

Issues Involved:

1. Duty demand based on forged and fake DEPB licenses.
2. Interest on the duty payable.
3. Confiscation of goods and imposition of redemption fine.
4. Imposition of penalties under Section 112(a) of the Customs Act, 1962.
5. Time-barred proceedings under Section 28 of the Customs Act, 1962.

Detailed Analysis:

1. Duty Demand Based on Forged and Fake DEPB Licenses:

The appellant was found to have imported consignments using forged and fake DEPB licenses. Specifically, DEPB license Nos. 02602431, 02601998, and 02601999 were used in Appeal No. CDM-35/2005, and DEPB license Nos. 02602431 and 02602425 were used in Appeal No. CDM-36/2005. The DEPB scrips were not issued by the appropriate authority and were purchased from non-existent broker firms. The total DEPB credit availed by the appellant was Rs. 5,33,960/- and Rs. 6,84,633/- respectively. The Tribunal upheld the duty demand, relying on the principle that credit derived from forged documents is non-est, as supported by the judgment in ICI India Limited Versus Commr. of Customs (Port), Calcutta - 2005 (184) E.L.T. 339 (Cal.).

2. Interest on the Duty Payable:

The Tribunal confirmed that interest on the duty payable was justified. The appellant's use of forged DEPB scrips meant that the duty was not paid at the time of import, necessitating the imposition of interest. The Tribunal referenced the legal principle that fraud nullifies all benefits derived from it, including the avoidance of interest on unpaid duty.

3. Confiscation of Goods and Imposition of Redemption Fine:

Goods valued at CIF Rs. 11,77,473.26 and Rs. 15,09,881.52 were held liable for confiscation under Section 111(o) of the Customs Act, 1962. However, since the goods were not available for confiscation, no redemption fine was imposed. The Tribunal upheld the confiscation orders, emphasizing that the fraudulent nature of the DEPB scrips justified the confiscation, even in the absence of the physical goods.

4. Imposition of Penalties Under Section 112(a) of the Customs Act, 1962:

Penalties of Rs. 3,00,000/- and Rs. 15,00,000/- were imposed under Section 112(a) of the Customs Act, 1962, in Appeal No. CDM-35/2005 and CDM-36/2005 respectively. The Tribunal noted that the learned Adjudicating Commissioner had not imposed any penalty under Section 114(a) of the Customs Act, 1962, but had imposed penalties under Section 112(a). Given that the investigation into the criminal conspiracy was still ongoing, the Tribunal set aside the penalties and remanded the matter for fresh adjudication upon the conclusion of the investigation.

5. Time-Barred Proceedings Under Section 28 of the Customs Act, 1962:

The appellant argued that the proceedings were time-barred under Section 28 of the Customs Act, 1962. However, the Tribunal dismissed this argument, stating that the use of forged DEPB scrips constituted a fraud that vitiated any claims of time-bar. The Tribunal referenced the decision in De-nocil Corpn. Protection Ltd. v. Commr. of Customs, Mumbai - 2004 (171) ELT 209 (Tri-Mumbai), which held that the extended time limit under Section 28 applies in cases of fraud, collusion, or willful misstatement.

Conclusion:

The Tribunal upheld the duty demands and interest in both appeals, confirming the fraudulent nature of the DEPB scrips used by the appellant. The confiscation orders were also upheld, though no redemption fine was imposed due to the unavailability of the goods. The penalties imposed under Section 112(a) were set aside and remanded for fresh adjudication after the conclusion of the ongoing investigation. The argument of time-barred proceedings was rejected, affirming the applicability of the extended time limit in cases involving fraud. The appeals relating to duty demand were dismissed, while the appeals relating to penalties were remanded for further consideration.

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