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TMI Blog2016 (2) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... m is not acceptable. The goods were cleared by the appellant by forged/fake DEPB licences and forged TRAs - Demand of duty confirmed - though penalty waived - Decided against the appellant. X X X X Extracts X X X X X X X X Extracts X X X X ..... rder and the Tribunal vide Final Order No.270/2009 dt. 16.3.2009 allowed the appeal on the ground of limitation. The Tribunal held that appellant had no knowledge or reason to believe that the licences purchased from the broker were fake/forged. The Tribunal while allowing the said appeal, relied on various High Courts and Tribunal decisions including the Tribunal's decision in the case of Aafloat Textiles (India) Pvt. Ltd. Vs CC - 2006 (201) ELT 39 (Tri.-Mumbai) and Tribunal's Larger Bench decision in Hico Enterprises Vs CC Mumbai - 2005 (189) ELT 135 (Tri.-LB). The Revenue filed ROM application in May 2009 against this order and the Tribunal vide MISC Order No.25/2010 dt. 11.1.2010 held that the case law relied upon by this Bench in the case of Aafloat Textiles (I) P. Ltd. (supra) was overruled by the Hon'ble Supreme Court in the case of CC Vs Aafloat Textiles (I) P.Ltd. reported in 2009 (235) ELT 587 (SC) and allowed the ROM. The said appeal was re-fixed for fresh hearing. Hence the present proceedings. The appeal was heard on 4.6.2015, 5.6.2015 and 11.6.2015. 5. Ld. Advocate appearing on behalf of the appellant submitted written synopsis dt. 1.4.2015 and reiterated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o para 4.02 and 4.03 of the order wherein the adjudicating authority expressed his inability and the appellants had agreed to waive cross-examination and to hear the case on merits. 5.2 Appellant also relied on Tribunal's final order dt. 16.3.2009 wherein the Tribunal discussed the issue in detail and allowed their appeal on limitation and clearly held that there was no collusion of imported and the extended period of limitation is not invocable and subsequently recalled the final order based on the apex court's decision in the case of CC Vs Aafloat Textiles (I) P. Ltd.(supra). 5.3 He further submitted that Hon'ble Supreme Court in the case of CC (Imports), Bombay Vs Hico Enterprises - 2008 (228) ELT 161 (SC) upheld the Larger Bench decision of the Tribunal [2005 (189) ELT 135 (Tri.-LB)] . He further submits that Supreme Court's order in the case of Hico Enterprises was passed by Three Judges Bench whereas the Apex Court's order in the case of Aafloat Textiles comprised of Two Judges Bench. He submits that there are two Apex court orders on the identical issue. He submits that Judgement rendered by Three Judges Bench will prevail over Two Judges Bench. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ema Exports whereas the said licence was remitted in the Lex Boots. She further submits that appellants were owners of original licences. She refers to transferror's laws as at pages 142, 144, 145. She submits that these TRAs were delivered at Paras International (Ref. Page 147) and relied on statement dt. 14.9.2004 (at pages 260 to 262) of Mr. V.Ramakrishna Rao. They have filed FIR only on 18.10.2004 which is an afterthought after deposing statement before customs authorities. She further submits that appellants have seen the original copies of licences, therefore question of cross examination is not relevant. Once the title does not belong to the licence holder, forgery has been established. She further submits that once the clear forgery has been established, TRAs have been forged and the appellants have not made any attempt to cause enquiry about bonafide of the licence. She submits that Hon'ble Supreme Court's decision in the case of Aafloat Textiles (India) Pvt. Ltd (supra) is applicable to the present case. She relied on the following decisions:- 1) Tata Iron & Steel Co. Ltd.- 2015 (319) ELT 546 (SC) wherein the Supreme Courtheld that extended period is invocab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting authority confirmed the demand against appellant and also imposed penalties on the appellants and several other co-noticees who involved in the forgery of licences. Whereas we find that only the appellant filed appeal and the same was allowed by way of remand by this Tribunal's order dt. 28.9.2005. The persons who involved in the fraud were imposed penalties under Section 112 (a) of the Customs Act at the original stage. They are not before this Tribunal in this appeal. 9. On perusal of the findings and the investigation charges brought out in the SCN we find that use of 9 DEPB forged licences has been established beyond doubt. The licensing authority, Jt. DGFT, Kanpur has clearly confirmed that these 9 licences were not issued by the Jt. DGFT. Similarly, it is established that the corresponding TRAs were not issued by the Kanpur Customs Commissionerate. Therefore, fraud and forgery of DEPB licences and TRAs have been established. 10. Appellant mainly contended that they were under bonafide belief that licences were original and valid as they have been regularly procuring the DEPB licences from the licence broker M/s. R.Somanathan & Co. and also contended that when the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocured in the market through broker and in this regard, they have relied Tribunal's Larger Bench decision in the case of Hico Enterprises (supra) which was affirmed by the Hon'ble Supreme Court. The Tribunal's Larger Bench in the above case held that transferee cannot be called upon to fulfil the condition of the notification. The above case is distinguishable and not applicable in view of Hon'ble Supreme Court's later judgement in the case of Commissioner of Customs Vs Aafloat Textiles (India) Pvt. Ltd. , wherein the Apex Court has dealt the issue in detail and settled the issue in favour of Revenue The relevant paragraphs of the Hon'ble Supreme Court judgement is reproduced as under:- 12. "Fraud" andcollusion vitiate even the most solemn proceedings in any civilized system of jurisprudence. It is a concept descriptive of human conduct. Michael Levi likens a fraudster to Milton's sorcerer, Comus, who exulted in his ability to, 'wing me into the easy hearted man and trap him into snares'. It has been defined as an act of trickery or deceit. In Webster's Third New International Dictionary "fraud" in equity has been defined as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to evade the provisions of a statute. "If a statute has been passed for some one particular purpose, a court of law will not countenance any attempt which may be made to extend the operation of the Act to something else which is quite foreign to its object and beyond its scope. Present day concept of fraud on statute has veered round abuse of power or mala fide exercise of power. It may arise due to overstepping the limits of power or defeating the provision of statute by adopting subterfuge or the power may be exercised for extraneous or irrelevant considerations. The colour of fraud in public law or administration law, as it is developing, is assuming different shades. It arises from a deception committed by disclosure of incorrect facts knowingly and deliberately to invoke exercise of power and procure an order from an authority or tribunal. It must result in exercise of jurisdiction which otherwise would not have been exercised. The misrepresentation must be in relation to the conditions provided in a section on existence or non-existence of which the power can be exercised. But non-disclosure of a fact not required by a statute to be disclosed may not amount to fraud. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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'." 14. This aspect of the matter has been considered by this Court in Roshan Deen v. Preeti Lal [2002 (1) SCC 100] Ram Preeti Yadav v. U.P. Board of High School and Intermediate Education [2003 (8) SCC 311], Ram Chandra Singh's case (supra) and Ashok Leyland Ltd. v. State of T.N. and Another [2004 (3) SCC 1]. 15. Suppression of a material document would also amount to a fraud on the court, (see Gowrishankar v. Joshi Amba Shankar Family Trust (1996 (3) SCC 310) and S.P. Chengalvaraya Naidu's case (supra). 16. "Fraud" is a conduct either by letter or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. Although negligence is not fraud but it can be evidence on fraud; as observed in Ram Preeti Yadav's case (supra). 17. In Lazarus Estate Ltd. v. Beasley (1956) 1 QB 702, Lord Denning observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or quality is caveat emptor , so that in the absence of fraud, the buyer has no remedy against the seller for any defect in the goods not covered by some condition or warranty, expressed or implied. It is beyond all doubt that, by the general rules of law there is no warranty of quality arising from the bare contract of sale of goods, and that where there has been no fraud, a buyer who has not obtained an express warranty, takes all risk of defect in the goods, unless there are circumstances beyond the mere fact of sale from which a warranty may be implied. { Bottomley v. Bannister , [1932] 1 KB 458: Ward v. Hobbs , 4 App Cas 13}. (Latin for Lawyers) 26. No one ought in ignorance to buy that which is the right of another. The buyer according to the maxim has to be cautious, as the risk is his and not that of the seller. 27. Whether the buyer had made any enquiry as to the genuineness of the license within his special knowledge. He has to establish that he made enquiry and took requisite precautions to find out about the genuineness of the SIL which he was purchasing. If he has not done that consequences have to follow. These aspects do not appear to have been considered by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l issue of fraud committed by the original licence holder, the Apex Court upheld the Tribunal's order confirming the demand on TISCO who is the transferee of such licence. The relevant paragraphs of the said judgement are reproduced as under: "2.In the facts of the present case, we find that the original licence holder, namely, Indian Card, Clothings Company Limited had deliberately suppressed the fact of having availed Modvat credit under Rule 57A of the Central Excise Rules, 1944, and made willfully wrong declaration to the licensing authority to obtain the endorsement of transferability of the same while transferring the licenses to the appellant herein. In view thereof, the extended period of limitation would be available to the authorities for the purpose of claiming the duty even against the appellant herein, who is the transferee of the licence in question. 3. We, thus, find no merit in these appeals which are accordingly dismissed." The ratio of the above Apex court's decisions is squarely applicable to the present case. 14.Therefore, by respectfully following the apex court judgement in the case of Afloat Textiles (India) Pvt. Ltd. (supra) and TISC ..... X X X X Extracts X X X X X X X X Extracts X X X X
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