2024 (11) TMI 1146 - AT - Customs

Licence /AROs obtained fraudulently - EOU's only falsified their records without manufacture or removal of any excisable goods against the said Licences/ARO's, that clearances were made only on paper against certain Advance Licence Nos./ ARO's against which no goods were moved from their units - E.O.U's obtained Advance Licences/Advance Release Orders through their local agents and manipulated their record s to show clearance of excisable goods as if manufactured by them, against such Licences/A.R.O's, so that the said records could be used to show their deemed export by which their export obligation would be shown to have been fulfilled. HELD THAT - As appellant has acted as agent for purchase and sale of advanced licence / Advance Release Order which were fraudulently obtained by 100 % EOU. In this fact even though the licence /AROs were obtained fraudulently, the appellant being not the party to said fraud, whereas he is only involved in the purchase and sale of advance licence /AROs. Without Knowledge of such fraud, it cannot be penalized. On the same set of fact, the appellant has been exonerated from penalty in the decision of this Tribunal reported as T.S Makkar Vs. Commissioner of Central Excise, Surat 2012 (10) TMI 981 - CESTAT AHMEDABAD wherein on the issue of imposition of penalty on the appellant there were difference of opinion between the Hon ble Member (T) and the Hon ble Member (J), due to which the third Member was appointed which hold the penalty is not imposable on the appellant. The aforesaid order was also followed in the appellant s own case by this Tribunal vide final order No. A/11619-11620/2023 dated 28.07.2023, whereby the penalty imposed under Rule 209 A of Central Excise Rules, 1944 and under Section 112 (b) of Customs Act, 1962 were set aside.

Issues Involved:

1. Whether the appellant was aware that the licenses were fake, forged, or fictitious.
2. Whether the Directorate of Revenue Intelligence (DRI) conducted a thorough investigation regarding the involvement of R.K. Gupta.
3. Whether the appellant was aware of the misuse of licenses by the 100% EOU for fictitious exports and whether he aided and abetted such activities.
4. Whether the appellant dealt with the goods and is liable to penalty under the relevant provisions.

Detailed Analysis:

1. Awareness of Fake Licenses:

The tribunal examined whether the appellant was aware that the licenses were fake, forged, or fictitious. It was found that there was no direct evidence, either oral or documentary, proving the appellant's awareness of the fraudulent nature of the licenses. The Member (Judicial) noted that the expressions "fake, forged, or fictitious" did not appear in the statements of any persons involved, including the appellant. The tribunal concluded that, in the absence of cogent evidence, the appellant could not be held liable for being aware of the fraudulent nature of the licenses.

2. Investigation by DRI:

The tribunal assessed whether the DRI made serious efforts to trace R.K. Gupta, who was allegedly involved in procuring the fake licenses. The Member (Judicial) observed that the efforts to locate R.K. Gupta did not yield any fruitful results, and there was no evidence of further sincere investigations by the DRI. The tribunal concluded that the DRI did not make serious efforts to trace R.K. Gupta, and this lack of investigation could not be held against the appellant.

3. Awareness and Aiding of Misuse by 100% EOU:

The tribunal evaluated whether the appellant was aware of the misuse of the licenses by the 100% EOU for fictitious exports and whether he aided and abetted such activities. It was found that none of the oral statements from individuals associated with the 100% EOU implicated the appellant in the misuse of licenses or fictitious exports. The tribunal concluded that there was no evidence to establish that the appellant was aware of or involved in aiding and abetting the misuse of licenses by the 100% EOU.

4. Liability for Penalty:

The tribunal considered whether the appellant dealt with the goods and was liable for penalties under Rule 209A of the Central Excise Rules, 1944, and Section 112(b) of the Customs Act, 1962. It was determined that the appellant did not deal with any goods in any manner, nor was there any allegation of such dealings. The tribunal referred to the precedent set in the case of M/s. Steel Tubes of India Ltd., which held that penalty is imposable only if excisable goods are dealt with by the person concerned with knowledge of liability of confiscation. Since the appellant did not deal with the goods, the tribunal concluded that the penalty was not sustainable.

Conclusion:

In light of the above findings, the tribunal held that the appellant was not liable for penalties. The appeals were allowed, and the penalties imposed on the appellant were set aside. The tribunal followed a consistent view based on previous judgments involving similar facts and modus operandi, concluding that the appellant was not liable for penalties under the given circumstances.

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