2010 (10) TMI 142 - AT - Customs

DEPB scheme - benefit under the DEPB scheme against fraudulently obtained DEPB scrips - duty demand, demand of interest, confiscation of the impugned goods, upheld and imposition of redemption fine

Summary

Issues Involved:
1. Entitlement to the benefit of DEPB scrips fraudulently obtained by the transferor.
2. Imposition of redemption fine and penalty when goods were not available for confiscation.

Issue-wise Detailed Analysis:

1. Entitlement to the Benefit of DEPB Scrips Fraudulently Obtained by the Transferor:

The Tribunal examined whether the appellant was entitled to the benefit of DEPB scrips that were fraudulently obtained by the transferor. The evidence gathered by Revenue proved that the DEPB scrips used by the Assessee for discharge of customs duty were fraudulently obtained. The Tribunal observed that the Assessee failed to make any enquiry from JDGFT to ascertain the genuineness of the scrips. The principle that "fraud and justice are sworn enemies" was emphasized, indicating that the Assessee acting without due diligence cannot claim innocence. The Tribunal cited various judgments, including the Apex Court's decision in Commissioner of Customs, Kandla v. Essar Oil Ltd., which held that fraud involves deceit and injury to the deceived and nullifies all transactions.

The Tribunal also referenced the case of Friends Trading Co. and Another v. Union of India, where it was held that any concession availed of on the basis of DEPB scrips obtained by producing forged documents could not be retained. The Tribunal concluded that the appellant is not entitled to duty benefit under the DEPB scheme against fraudulently obtained DEPB scrips, upholding the duty demand and interest.

2. Imposition of Redemption Fine and Penalty When Goods Were Not Available for Confiscation:

The Tribunal examined whether redemption fine and penalty were imposable on the appellant when the goods were not available for confiscation. The first Appellate Authority had set aside the redemption fine and penalty on the ground that the goods were neither available for confiscation nor cleared on undertaking/bond. The Tribunal noted that the fraudulent nature of the DEPB scrips used by the Assessee justified the adjudication done against the Assessee. However, considering the circumstances of the case, the Tribunal set aside the penalties while upholding the confiscation of the impugned goods and the imposition of redemption fine.

Conclusion:

The Tribunal held that the appellant is not entitled to duty benefit under the DEPB scheme against fraudulently obtained DEPB scrips. The duty demand, interest, and confiscation of the impugned goods were upheld, but the penalties were set aside. The appeal filed by the appellant was dismissed, and the appeal filed by the Department was partly allowed.

(Pronounced in the open Court on 8-10-2010)