2014 (9) TMI 289 - HC - Customs

Suspension of import / advance license - import of bearings - fraud - it was submitted that, imports were effected by different importers under cover of 15 Bills of Entry and those Bills of Entry were filed prior to suspension of the Licence and the goods were also cleared - Appellant contended that The delay in completing formalities of transferring the Licence and prior thereto, endorsing transferability thereon, would not make the import contrary to law attracting any duty leave alone any penalty, The imports were made prior to cancellation. Held that - the original licence in the name of M/s. Amrit Laxmi Machine Works was valid up to 21th May, 1999. If the same was stated to be lost in September, 1999, the application for issuance of duplicate licence was made only in October, 1999. Pertinently, a duplicate licence was issued in November, 1999 in the name of original licence holder. In other words, when the Bills of Entry were filed on 19th August, 1999, there was no valid licence in the names of importer. There was no application for transferability made on 19th August, 1999 nor the licence was made transferable. Therefore, in respect of the Bills of Entry filed on 19th August, 1999 the question of extending benefits under the exemption notification does not arise. This judgment in the case of Sampat Raj Dugar 1992 (1) TMI 103 - SUPREME COURT OF INDIA has been rightly distinguished by the Tribunal in the case before us. The Tribunal, while dealing with the argument that the appellants were entitled for duty exemption as the licence was made transferable, but stood cancelled only on 24th December, 1999 and the imports made prior to this date were eligible for duty exemption, has rightly observed in paragraph 6.21 of the judgment that in this case there was no valid licence in the name of importers. Levy of penalty - Held that - The justification for imposing penalty is based on the conclusion that there was no valid licence in the name of the importer. He could not have allowed filing of documents before the Customs Authorities. The licence was valid only up to 21st May 1999, yet the Bills of Entry were filed on 19th August, 1999, 15th December, 1999, 20th December, 1999 and 28th December, 1999 claiming benefits of duty exemption under the advance licensing scheme and particularly when no valid licence existed in the names of importer. This is, therefore, not a case of any minor or technical dereliction or breach of rules. The absence of valid licence in the names of importer and yet attempts being made to evade customs duty are rightly termed as fraud. - Decided against the assessee.

Issues Involved:
1. Validity and transferability of the import licence.
2. Alleged forgery and fraud in obtaining and using the import licence.
3. Legality of the imports made under the questioned licence.
4. Jurisdiction and findings of the Tribunal.
5. Applicability of legal precedents.

Detailed Analysis:

1. Validity and Transferability of the Import Licence:
The core issue revolves around the validity and transferability of Advance Licence No. 03014593 issued on 22nd November 1996 to M/s. Amrit Laxmi Machine Works. The licence was amended multiple times and its validity extended up to 21st May 1999. Despite the licence being misplaced and subsequently reported lost, a duplicate was issued on 22nd November 1999. The Tribunal found that the licence was not valid at the time of the imports made in August and December 1999, as the original licence had expired, and the duplicate was issued after the expiry date. The Tribunal concluded that the imports made under this licence were not covered by a valid licence, thereby denying the benefits of the exemption notification.

2. Alleged Forgery and Fraud in Obtaining and Using the Import Licence:
The Tribunal and the High Court noted that the licence was obtained and manipulated through fraudulent means. The original licence holder, M/s. Amrit Laxmi Machine Works, and associated individuals engaged in misrepresentation to make the licence transferable and to modify the items eligible for import. This manipulation was done to facilitate imports and evade customs duty. The Tribunal found clear evidence of collusion and conspiracy to defraud the Revenue, which justified the imposition of penalties on the involved parties.

3. Legality of the Imports Made Under the Questioned Licence:
The imports made under the questioned licence were deemed illegal as the licence was not valid at the time of importation. The Tribunal observed that the Bills of Entry filed on 19th August 1999 and in December 1999 were not supported by a valid licence. The duplicate licence issued in November 1999 did not retroactively validate the imports made earlier. Consequently, the imports were not eligible for duty exemption, and the demand for duty and imposition of penalties were upheld.

4. Jurisdiction and Findings of the Tribunal:
The appellants argued that the Tribunal had exceeded its jurisdiction by going beyond the show cause notice and making new findings. However, the High Court dismissed this contention, stating that the Tribunal's findings were based on the evidence and allegations presented in the show cause notice. The appellants were aware of the case they had to meet, and there was no element of surprise or prejudice. The High Court affirmed that the Tribunal's conclusions were justified and did not warrant reappraisal.

5. Applicability of Legal Precedents:
The appellants relied on the Supreme Court judgment in Union of India v. Sampat Raj Dugar, arguing that the subsequent cancellation of a licence does not retrospectively render the import illegal. The High Court distinguished this case, noting that in Sampat Raj Dugar, the licence was valid at the time of importation and was only later cancelled. In contrast, the licence in the present case had expired before the imports were made. The High Court upheld the Tribunal's interpretation that a licence could not be deemed valid after its expiry or used by a non-transferable holder.

Conclusion:
The High Court dismissed the appeals, confirming the Tribunal's findings that the imports were made without a valid licence, were fraudulent, and not eligible for duty exemption. The penalties imposed were justified, and no substantial question of law was raised by the appellants. The judgment emphasized the importance of adhering to the validity and transferability conditions of import licences to prevent fraud and protect public revenue.

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