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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 ..... 4 Lex Boots, Kanpur 1700846 337281 dated 15.4.2004 2. 042/04-05 dt. 8.4.2004 0610006696/2/06/00 dt. 12.1.2004 Mirza Tanners Ltd., Kanpur 1039593 3. 044/04-05 dt. 8.4.2004 0610006862/3/06/00 dt. 12.2.2004 Talat Leather Pvt. Ltd., Kanpur 1059160 4. 062/04-05 dt. 12.4.2004 0610006586/2/06/00 dt. 22.12.2003 Mirza Tanners Ltd., Kanpur 984807 337399 dated 16.4.2004 5. 063/04-05 dt. 12.4.2004 0610006588/2/06/00 dt. 22.12.2003 Mirza Tanners Ltd., Kanpur 984760 6. 064/04-05 dt. 12.4.2004 0610006692/2/06/00 dt. 12.1.2004 Mirza Tanners Ltd., Kanpur 1019690 7. 106/04-05 dt. 26.4.2004 0610006793/2/06/00 dt. 28.1.2004 Mirza Tanners Ltd., Kanpur 994332 338073 Dated 30.04.2004 8. 107/04-05 dt. 26.4.2004 0610006792/2/06/00 dt. 28.1.2004 Mirza Tanners Ltd., Kanpur 1020780 9. 108/04-05 dt. 26.4.2004 0610006694/2/06/00 dt. 12.1.2004 Euro Footwear Ltd., Kanpur 725623 The above DEPB licences were purchased from the open market through brokers M/s. R.Somanathan & Co. The results of investigation revealed that all the 9 DEPB licences and the corresponding TRAs were forged and obtained and the benefit of notificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant submitted written synopsis dt. 1.4.2015 and reiterated the submissions and the chronology of events relating to purchase of DEPB licences from their broker M/s. R.Somanathan & Co. He submits that they are importing raw materials since 1998 and they used DEPB licences for payment of customs duty. All these DEPB licences were purchased in the open market through various brokers including M/s. R. Somanathan & Co. They are using the services of their broker M/s.R. Somanathan & Co. from 2003 onwards. The department has alleged that 9 DEPB licences as tabulated above were purchased through broker M/s.R. Somanathan & Co. and most of the transactions were through telephones regarding the availability of the licence and commission etc. Once the licence amounts were negotiated they requested the broker for obtaining the TRAs from the parent Custom House. They made payments on receipt of the licences/TRAs to the licence holders and to the broker through cheques. The entire transaction was to be done within a period of two weeks from the date of initiation by the broker for procurement of licence. They used to purchase licences from open market at a discount rate of 94% to 98% wherea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Three Judges Bench will prevail over Two Judges Bench. In this regard, he relied on State of U.P. Vs Ram Chandra Trivedi - (1976) 4 SCC 52. 5.4 He submits that the period involved is April 2004 whereas the SCN was issued in December 2004 and during the relevant period, SCN ought to have been issued within 6 months. As there was no suppression of facts longer period of limitation is not invocable. He submits that adjudicating authority has held that appellant's relation with M/s.R. Somanthan & Co. was of agents/employee relation and he submits that broker is not an employee of their company. As it is a pure transaction between licence broker and the company on principle to principle basis there is no fraud or forgery and it can be established only after cross-examining of the persons concerned. In this regard, he relied on Tribunal's decision in the case of BANCO Aluminium Ltd. Vs CCE - Vadodara - 2005 (181) ELT 110 (Tri.-Mumbai). For invoking limitation, he relied on Supreme Court decision in the case of Kaur & Singh Vs CCE New Delhi - 1997 (94) ELT 289 (SC). He submitted that regarding forgery, it is a criminal offence where Section 463 of IPC is attracted and it is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C) wherein the Supreme Courtheld that extended period is invocable in the case of fraud and forgery of licence. 2) CC Vs Candid Enterprises - 2001 (130) ELT 404 (SC) 3) Sharman Woollen Mills Ltd. Vs CC Amritsar 2011 (263) ELT 136 (Tri.-Del.) 4) Commissioner Vs CESTAT Chennai 2009 (240) ELT 166 (Mad.) 5) Gaur Impex Vs Commissioner 2010 (249) ELT A28 (SC) 6.1 She further submits that Supreme Court decision in the case of Hico Enterprises (supra) has not discussed the Chengalvaraya and Ashok Leyland cases and above cases but it only related to transferree and transferor of licences. He further submits that Supreme Court judgement in the case of Aafloat Textiles (India) Pvt. Ltd. which was again reaffirmed by the Supreme Court in the case of TISCO (supra). She submits that once cross examination is waived, therefore question of agitating this issue before Tribunal is not sustainable. 7. Ld. advocate countered the argument of Ld. AR and submits that the appellant's request for cross-examination of witnesses is still maintained and they never waived the cross examination. Regarding percentage of payment of brokerages, the discounts was in the range between 94% and 95% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roker M/s. R.Somanathan & Co. and also contended that when the department intimated the forgery of licence they have acted immediately and initiated action by filing F.I.R against the brokers and concerned persons. Appellant also contended that the adjudicating authority has not allowed for cross-examination of officials. In this regard, we find that the adjudicating authority has clearly discussed in his findings at para 5.6 to 5.10 that JDGFT in his official capacity have verified and certified that the said DEPB licences were not issued by Jt.DGFT. Similarly Customs officials have also confirmed that they have not issued the TRAs in their official capacity and they are not beneficiaries of licences. Therefore, we do not find any justification with the appellant's contention on this issue. 11. On merits, we find that appellant's only plea is that they have been regularly procuring the DEPB licences through their licence broker M/s.R. Somanathan & Co. They have been using the services of the licence broker M/s. R.Somanathan & Co. from 2003. On perusal of the statement of various persons including Mr. Chander @ B.R. Chandran who arranged the licence at the request of V.San ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ionary "fraud" in equity has been defined as an act or omission to act or concealment by which one person obtains an advantage against conscience over another or which equity or public policy forbids as being prejudicial to another. In Black's Legal Dictionary, "fraud" is defined as an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or surrender a legal right; a false representation of a matter of fact whether by words or by conduct, by false or misleading allegations, or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury. In Concise Oxford Dictionary, it has been defined as criminal deception, use of false representation to gain unjust advantage; dishonest artifice or trick. According to Halsbury's Laws of England, a representation is deemed to have been false, and therefore a misrepresentation, if it was at the material date false in substance and in fact. Section 17 of the Indian Contract Act, 1872 defines "fraud" as act committed by a party to a contract with intent to deceive a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of every fact does not vitiate the agreement. "In a contract every person must look for himself and ensures that he acquires the information necessary to avoid bad bargain. In public law the duty is not to deceive. (See Shrisht Dhawan (Smt.) v. M/s. Shaw Brothers, [1992 (1) SCC 534]. 13. In that case it was observed as follows: "Fraud and collusion 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 an act or omission to act or concealment by which one person obtains an advantage against conscience over another or which equity or public policy forbids as being prejudicial to another. In Black's Legal Dictionary, fraud is defined as an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or surrender a legal right; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be allowed to stand if it has been obtained by fraud. Fraud unravels everything." In the same judgment Lord Parker LJ observed that fraud vitiates all transactions known to the law of however high a degree of solemnity, (page 722). 18. These aspects were highlighted in the State of Andhra Pradesh and Anr. v. T. Suryachandra Rao [2005 (5) SCALE 621] and Bhaurao Dagdu Paralkar v. State of Maharashtra and Ors. [2005 (7) SCC 605]. 19. It was for the buyer to establish that he had no knowledge about the genuineness or otherwise of the SIL in question. 20. The maxim caveat emptor is clearly applicable to a case of this nature. As per Advanced Law Lexicon by P. Ramanatha Aiyar, 3rd Edn. 2005 at page 721: Caveat emptor means "Let the purchaser beware." It is one of the settled maxims, applying to a purchaser who is bound by actual as well as constructive knowledge of any defect in the thing purchased, which is obvious, or which might have been known by proper diligence. 21. "Caveat emptor" does not mean either in law or in Latin that the buyer must take chances. It means that the buyer must take care.- (See Wallis v. Russell (1902) 21 R 585, 615). 22. "Caveat emptor" is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forged or fake that was not sufficient to hold that there was no omission of commission on his part so as to render silver or gold liable for confiscation. 28. As noted above, SILs were not genuine documents and were forged. Since fraud was involved, in the eye of law such documents had no existence. Since the documents have been established to be forged or fake, obviously fraud was involved and that was sufficient to extend the period of limitation." The ratio of the above apex court's decision is squarely applicable to the present case. The Hon'ble Apex court has clearly laid down and discussed the issue what is "Fraud" and "Caveat Emptor" and clearly held that buyer has no remedy against the seller and takes all risks of defect and clearly held that appellant, buyer of the licence has to establish that he made enquiry and took requisite precautions to find out the genuineness of the licence which he purchased and the apex court said that if he has not done so, the consequences had to follow. In the present case, we find that appellants have indulged in procuring the licence through licence broker Mr.Shankaran of M/s.R.Somanathan & Co. and appellant themselves admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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