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TMI Blog2010 (10) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... se, just because he has successfully transferred the scrip to the appellants after obtaining the same fraudulently? - Duty Liability restored, penalties however set aside - C/424, 462, 463, 425, 461, and 537/2006 - C/159-164/2010(PB) - Dated:- 8-10-2010 - Dr. Chittaranjan Satapathy, Member (T) and Shri D.N. Panda, Member (J) [Order per : D.N. Panda, Member (J)]. - Being aggrieved by the first appellate orders appearing in column 4 of the Table below, passed by the first appellate authority, following 6 (six) Appeals as appearing in column 2 of the table were filed by Revenue challenging those orders allowing use of DEPB scrips by the Respondent importers against their imports. Sr. No. Appeal No. Appellants/Respondents Impugned Order appealed (1) (2) (3) (4) 1. C/424/06 Commissioner of Customs, Amritsar v. Sona Casting Pvt. Ltd 41 to 43/Cus./CHD/06 dated 28-2-2006 passed by the Commissioner (Appeals) Chandigarh 2. C/462/06 Commissioner of Customs Amritsar v. M/s. Chopra Metal. Co. -do- 3. C/463/06 Commissioner of Customs Amritsar v. M/s. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the concerned bank for which he cancelled the DEPB scrip being ab-initio void vide O-I-O issued from file No. 9/34/AM.02/ ECA/LDH/39338 dated 1-1-2002. 2.3 A common adjudication order No. 18/ADC/CUS/05 dated 24-6-2005 was passed by the Addl. Commissioner, Customs (Preventive) Commissionerate, Amritsar in all the three cases aforesaid vide C. No. VIII-10(HQ)/ Cus/Asr/Adj./15/02/3148 dated 27-6-2005. Demand of Rs. 55,306/- (Rs. 28,012/-BCD + Rs. 27,294/- SAD) along-with interest was confirmed against M/s. Sona Castings Pvt. Ltd. and the goods valued at Rs. 14,62,991/- imported vide Bill of Entry No. 1350 dated 22-9-2001 and 1355 dated 25-9-2001 were confiscated under Section 111(o) of the Customs Act, 1962. As the goods were not available for confiscation, and already cleared for home consumption, redemption fine of Rs. 35,000/- in lieu of confiscation was imposed. A penalty of Rs. 5,000/- was also imposed under Section 112 of the Act. 2.4 Demand of Rs. 2,83,321/- (Rs. 2,16,358/- BCD + Rs. 66,963/- SAD) along-with interest was confirmed against M/s. Chopra Metal Co. and the goods valued at Rs. 10,69,009/- imported vide Bill of Entry No. 807 dated 26-9-2001 were c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/ECA/LDH/38806, dated 21-12-2000, being abinitio void. Consequently adjudication order No. 23/ADC/CUS/05 dated 27-7-2005 read with corrigendum O-I-O No. 20/ADC/CUS/06 was passed by the Addl. Commissioner, Customs (Preventive) Commissionerate, Amritsar, vide order in C. No. VIII-10(HQ)/Cus/Adj./88/2002/3626-35 dated 1-8-2005 and C. No. VIII-(HQ)10/CUS/ASR/88/2002/3856-66 dated 10-8-05 raising duty demand of Rs. 1,04,315/- along-with interest against the Respondents and the goods valued at Rs. 10,03,485/- imported vide Bill of Entry No. 0001929 and 0001930 both dated 5-12-2000 were confiscated under Section 111(o) of the Customs Act, 1962. As the goods were not available for confiscation, and already cleared for home consumption, redemption fine of Rs. 20,000/- in lieu of confiscation was imposed. A penalty of Rs. 10,000/- was also imposed under Section 112 of the Act. Against such adjudication, in appeal learned Commissioner (Appeals) Chandigarh vide Order-in Appeal No. 44/Cus/CHD/06 dated 16-3-2006 set aside the duty demands, redemption fine, interest and penalty on the ground that no act or omission or commission were brought on record to substantiate that appellant connived or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de the duty demand, redemption fine, interest and penalty on the ground that no act or omission or commission were brought on record to substantiate that appellant connived or abetted in fraudulent procurement of DEPB and the Respondents had purchased the DEPB scrips in normal market parlance and made the payment therefor through bank transactions. Revenue is therefore in appeal against the above order passed by the Commissioner (Appeals) Chandigarh, praying for restoration of adjudication. 2.9 C/537/06 Commissioner of Customs Amritsar v. M/s.s Dev Steel Forging Industry Revenue being aggrieved came in appeal against first appellate order passed by learned Commissioner (Appeals) setting aside demand of duty, redemption fine, penalty and interest levied against the respondent in adjudication. M/s. Dev Steel Forging Industry, Sodal Road, Jalandhar utilized the DEPB scrip No. 30100113090/4/06/00 dated 20-11-2001 for import of goods, free of duty, using Notification No. 34/97-Cus. dated 7-4-1997. Import was made vide Bill of Entry No. 1068 dated 27-11-01. The DEPB scrip was transferred to the respondents by M/s. M.R. International, Jalandhar. The Directorate General of Foreig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otect their interest. But that was not done for which the Respondent cannot be said to have exercised due care and diligence to prove its bona fide. (4). When fraud was established that has unravelled all. Revenue's stand is fortified from the Apex Court judgment in the case of UOI v. Jain Shudh Vanaspati Ltd. - 1996 (86) E.L.T. 460 (S.C.). (5). So also fraud nullifies every thing as held by Apex Court in CC v. Candid Enterprises - 2001 (130) E.L.T. 404 (S.C.) and in the case of Delhi Development Authority v. Skipper Construction Company (P) Ltd - AIR 1996 (SC) 2005. (6) Cheating was done to claim undue claim of DEPB Credit and Revenue was defrauded. The fraud committed by transferor of DEPB scrips avoid all judicial acts, ecclesiastical or temporal and the transferor had no title to transfer the DEPB credits to the Respondents for which the Respondents are liable to make good of losses suffered by Revenue. Accordingly the adjudication done against the Respondents is not interfereable following Apex Court judgment in the case of S.P. Chengalavaraya Naidu v. Jagannath - AIR 1994 SC 853 (7). The DEPB credits issued being ab initio void was not transferable. It has been held by the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellation, the respondents had not committed any fraud or any wilful misstatement or suppression of facts to invite a proceeding under Section 28 of the Customs Act, 1962. (5) The Show cause notice issued was barred by limitation when the respondents acted bona fide and utilised the same for discharge of duty. (6) There was no collusion of the respondents with the transferor of the scrips for which no penalty was imposed by the JDGFT on the respondents. Therefore extended period is not invokable in the present case following the ratio laid down by Hon'ble High Court of Punjab Haryana in the case of CC v. Leader Valves Ltd. - 2007 (218) E.L.T. 349 (P H) which has been approved by Hon'ble Supreme Court as reported in CC v. Leader Valves Ltd. - 2008 (227) E.L.T. A29 (S.C.). (7) When the DEPB scrips were not forged but were good scrips issued on the basis of fabricated documents, the respondents are not liable to consequence under the law following the judgment in the case of M/s East West Exporters v. Assistant Collector of Customs. (8) When the goods were not available for confiscation, order of confiscation was unwarranted and no redemption fine was imposable. So also penalty was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Apex Court in the case of Commissioner of Customs, Kandla v. Essar Oil Ltd. - 2004 (172) E.L.T. 433 (S.C.) that by "fraud" is meant an intention to deceive; whether it is from any expectation of advantage to the party himself or from the ill will towards the other is immaterial. The expression "fraud" involves two elements, deceit and injury to the deceived. Undue advantage obtained by the deceiver, will almost always call loss or detriment to the deceived. Similarly a "fraud" is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage. (See S.P. Changalvaraya Naidu v. Jagannath [1994 (1) SCC 1]. 11. In a leading English case i.e. Derry and Ors. v. Peek (1886-90) All ER-1 what constitutes "fraud" was described thus : (All ER p. 22 B-C) "fraud" is proved when it is shown that a false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false". This aspect of the matter has been considered by Apex Court in Roshan Deen v. Preeti Lal [2002 (1) SCC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and H. Guru Investment (North India) Pvt. Limited v. CEGAT, New Delhi, 1998 (104) E.L.T. 8 (All.). Hon'ble High Court of Punjab Haryana in the case of Golden Tools International v. Joint DGFT, Ludhiana, 2006 (199) E.L.T. 213 (P H), upheld cancellation of DEPB and levy of penalty under Section 11(2) of the Foreign Trade (Development and Regulation) Act, 1992. Hon'ble court observed that the entire claim of the petitioners was based on falsehood. It was not in dispute in that case that furnishing of bank certificate of exports and realisation of export proceeds was a pre-requisite for issue of DEPB. Admittedly, the bank certificates furnished were fabricated documents. The observations of the former Lord Chief Justice of England, Sir Edward Coke, more than three centuries ago, that "fraud avoids all judicial acts, ecclesiastical or temporal", noticed by the Supreme Court in S.P. Chengalvaraya Naidu v. Jagannath, AIR 1994 SC 853, are apt for the instant case. The Apex Court has also observed that an act of deliberate deception with the design of securing something by taking unfair advantage of another is a "fraud". "Fraud" is a cheating intended to get an advantage. A person whose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 52 (P H) have held as under :- "The assessee has preferred this appeal under section 130 of the Customs Act, 1962 (in short, 'the Act') against the order dated 4-4-2006 Passed by the Customs Excise and Service Tax Appellate Tribunal, New Delhi [2006 (202) E.L.T. 611 (Tribunal)]. 2. The assessee imported goods against DEPB Scrips without payment of duty. It was later found that DEPB Scrips were obtained by producing forged bank certificate of export and realization. The DEPB Scrips were cancelled by the competent authority. Accordingly, demand of duty was confirmed after notice. The assessee purchased DEPB Scrips from M/s. Vivek Impex Private Limited who purchased the same from M/s. Shyam International who had purchased the same from M/s. Parker Industries. The Commissioner of Customs held that any concession availed of on the basis of DEPB Scrips obtained by producing forged documents could not be retained. This view has been affirmed by the Tribunal. 3. We examined an identical issue in our recent order dated 1-9-2007 in CUSAP No. 27 of 2008 (M/s. Munjal Showa Limited v. Commissioner of Customs and Central Excise (Delhi (IV), Faridabad) [2009 (246) E.L.T. 18 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the firm with whom the appellant entered into the transaction was not traceable. The appellant itself had come to the conclusion that the documents were forged. In these circumstances, if further opportunity has been given to the appellant on its own asking and for its own benefit, we do not find any error in the course adopted by the Tribunal so as to give rise to substantial question of law sought to be raised." 4. We also made a reference to judgments of the Hon'ble Supreme Court in S.P. Chengalvaraya Naidu v. Jagannath, AIR 1994 S.C. 853 and Commissioner of Customs v. Essar Oil Ltd. - 2004 (172) E.L.T. 433 (S.C.) = (2004) 11 SCC 364 and judgments of this Court in Golden Tools International v. Joint DGFT, Ludhiana - 2006 (1991 E.L.T. 213 and The Commissioner of Customs, Commissionerate, The Mall, Amritsar v. Mis. Parker Industries, Jalandhar - 2007 (207) E.L.T. 658. 5. In view of above, we do not find any ground to interfere with the order upholding demand of duty on goods in respect of which exemption had been availed of on the basis of DEPB Scrips obtained against forged documents. 6.No substantial question of law arises. 7.The appeal is dismissed." ..... X X X X Extracts X X X X X X X X Extracts X X X X
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