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2023 (4) TMI 670 - AT - CustomsMis-use of duty free licences - M/s. Kirti Cargo Kirti was indicated as the Customs Broker /Custom House Agent (CB/CHA) in the Bills of Entry but they were actually filed by one Shri Sharafat Hussain Sharafat who was neither a licenced CB nor was the employee of Kirti - manipulation of license and fraudulently getting wrong figures entered about the licenses in the Customs EDI system effectively showing enhanced values of each licence in the system - Confiscation - penalty - HELD THAT - The matter in this case is identical to the case of M/s Nidhi Enterprises 2022 (11) TMI 869 - CESTAT NEW DELHI inasmuch as the appellant did not pay the duty as required, but instead of paid a percentage of the duty payable to Sharafat who, in turn, used fake/forged scrips/licenses to clear the goods. The appellant was not aware as to which scrip or license would be used to clear its goods because they were never transferred in its name. Without transferring the licenses, Sharafat transferred the benefit of the licence to the appellant. In doing so, he also manipulated the license itself in collusion with the officers and entered wrong figures in the customs EDI system thereby magnifying several fold the benefit under the license. It is a well settled legal principal that fraud vitiates everything and nobody can profit from the fraud whether or not the fraud itself was committed by that person. In this case, the fraud of forging and manipulating the license was done by Sharafat and Vinod Kumar Pathror and not by the appellant. It is for this reason, the FIR filed by the Department with the Economic Offences Wing of the Police also does not include the appellant as a suspect. However, the benefit of the exemption under the license is not available on the strength of a fraudulent licence and the appellant is liable to pay the duty. In the case of Nidhi Enterprises, this Tribunal held that the buyer of the licenses has to fulfill the requirement of Caveat Emptor . The appellant in this case has not even remotely fulfilled its obligation as a buyer of the licences/ scrips. In fact, the appellant had not even bought the licences/scrips but only purchased the benefit from the licences/scrips. Therefore, the impugned order correctly confirmed the demand of duty from the appellant. Since, the duty is payable the corresponding interest also has to be paid, as applicable. Confiscation and penalty - HELD THAT - Neither the manipulation by entering the wrong details of the licences/scrips in the Customs EDI system nor clearing the goods without producing the original licence at the time of clearance of goods would have been possible without the collusion of the officers concerned. Therefore, the officers have necessarily to be complicit in the offence but action against the officers is not part of these proceedings. Learned authorised representative states that the matter relating to the involvement of officers has been referred to the Central Bureau of Investigation which is investigating the matter - Also, if the involvement of the officers is a far more serious matter than mere action under the Customs Act and it also needs to be investigated from the point of Prevention of Corruption Act and Central Civil Services Conduct Rules. As far as the imported goods in this case are concerned, they were clearly liable for confiscation under section 111(o). As they were not available for confiscation, they were not actually confiscated nor has any redemption fine been imposed - the goods were correctly held as liable for confiscation under section 111(o). Levy of penalty under section 114A and section 114AA - HELD THAT - Penalty under section 114AA is imposable only if knowingly or intentionally a false declaration, statement or document is made, signed or used. In the factual matrix of this case, we found no evidence that the appellant had knowledge of the fraud/forged licences/ scrips being used to clear the goods and therefore, the penalty under section 114AA cannot be sustained - Penalties were imposed under sections 112 (a) (ii) and 114AA on Shri Jain, the Director of the appellant firm. Penalty under the section 112 can be imposed for any action or omission which renders the goods liable to confiscation under section 111. In this case, the goods were exempted from payment of duty subject to come conditions and those conditions were not fulfilled. The case is squarely covered under section 111 (o) and the goods have been correctly held to be liable for confiscation. Consequently, the penalty under section 112 (a) (ii) on the appellant needs to be upheld. Appeal filed by the appellant is partly allowed by setting aside the penalty imposed on the appellant (M/s. Bimal Papers Pvt. Ltd.) under section 114AA and upholding rest of the impugned order insofar as it pertains to the appellant M/s. Bimal Papers Pvt. Ltd.
Issues Involved:
1. Demand of Customs Duties and Interest 2. Appropriation of Deposited Amount 3. Liability for Confiscation of Imported Goods 4. Imposition of Penalties under Various Sections of the Customs Act, 1962 Summary: 1. Demand of Customs Duties and Interest: The Tribunal confirmed the demand of Customs duties (BCD + CVD) amounting to Rs. 2,35,29,862/- under Section 28(4) of the Customs Act, 1962, along with applicable interest under Section 28AA. The appellant used fake/forged duty-free licenses/scrips to clear imported goods, which were neither issued to nor transferred to the appellant. The appellant paid a percentage of the duty to Sharafat, who manipulated the licenses in the Customs EDI system. The Tribunal upheld the duty demand, citing the Supreme Court's decision in Munjal Showa Ltd., which held that duty liability exists even if the importer did not forge the licenses. 2. Appropriation of Deposited Amount: The Tribunal noted the appellant's claim of having deposited Rs. 57,57,716/- through a demand draft, which was not mentioned in the impugned order. However, the Tribunal did not provide specific relief regarding this claim in the judgment. 3. Liability for Confiscation of Imported Goods: The imported goods were held liable for confiscation under Section 111(o) of the Customs Act, 1962, as they were cleared using fraudulent licenses without fulfilling the required conditions. The Tribunal set aside the confiscation under Section 111(d) but upheld the liability under Section 111(o), as the goods were exempt from duty subject to conditions which were violated. 4. Imposition of Penalties: - On M/s Bimal Paper Pvt. Ltd.: Penalties under Sections 114A (Rs. 2,35,29,862/-) and 114AA (Rs. 30,00,000/-) were imposed. The Tribunal upheld the penalty under Section 114A as mandatory due to the extended period of limitation but set aside the penalty under Section 114AA, finding no evidence of intentional false declarations by the appellant. - On Shri Praveen Kumar Jain: Penalties under Sections 112(a)(ii) (Rs. 6,00,000/-) and 114AA (Rs. 5,00,000/-) were imposed. The Tribunal upheld the penalty under Section 112(a)(ii) but set aside the penalty under Section 114AA, finding no evidence of knowledge of fraud. - On Others (Sharafat Hussain, Vinod Kumar Pathror, and M/s Kirti Cargo): The Tribunal did not address these penalties specifically in the summary provided. The appeals were partly allowed, setting aside the penalties under Section 114AA for both the appellant and Shri Jain while upholding the rest of the impugned order.
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