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TMI Blog2007 (8) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... fiscation etc. It has also been held that the penalty imposed under Section 112 of the Act was not legally sustainable because in the show cause notice specific clauses (a) or (b) were not invoked against the assessee-respondent. The revenue has claimed that the following substantial question of law would emerge for determination of this Court :- "Whether in the facts and circumstances of the case, assessee-respondents are liable for penal action under Section 112 (b) of the Customs Act, 1962, on account of fraudulent availment of Duty Entitlement Pass Book (DEPB) benefit on the basis of forged Bank Certificate of Export and Realisation (BCER)?" 2. Brief facts of the case may first be noticed. The assessee M/s ATM International is a partnership concern and they are engaged in the export of various items. On the basis of intelligence reports, Anti-Smuggling Unit of Customs Commissionerate, Amritsar, initiated investigation against the assessee-respondents, who were alleged to be involved in fraudulent availment of credit on the export of goods under Duty Entitlement Pass Book Scheme (DEPB) by forging documents. A show cause notice after investigation was issued on 3.5.2002 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btained DEPB credits to the tune of Rs. 27,22,013/- and the DEPB Scrips, obtained fraudulently were registered with customs at CFS (OWPL), Ludhiana. Those Scrips were transferred to various buyers for consideration. They tendered their respective statements and also filed reply to the show cause notice before the Adjudicating Authority. After affording a detailed opportunity of hearing, the Adjudicating Authority recorded the following findings :- "24. On investigation, it has been proved beyond any doubt that DEPB scrips were got issued by Noticee No. 2 on the basis of fake BRCs, which have been cancelled ab-initio by the licensing authority. In this connection I find that similar issue came up for consideration before the Hon'ble Tribunal in the case of ICI India Ltd. Vs. Commissioner of Customs, Calcutta cited as 2003 (151) ELT 336 (Tri). The Hon'ble CEGAT after consideration observed that "Fake documents ab initio unlawful". It was also held "no benefit could accrue to their holder and no credit of duty could be taken on them, denial of benefit of Notification No. 34/97-Cus dated 7.4.1997 upheld". The Tribunal also held that fake document is ab-initio unlawful and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liance on Section 112 of the Act has referred to the admissions made by the assessee-respondent No. 2 Shri Ashok Kumar and others and held as under:- "27. I find that Sh. Ashok Kumar @ Lucky (Noticee No. 3) was looking after all the business operations of the Noticee No. 2 including exports and foreign exchange. During investigations he admitted that the Bank certificates of Exports Realization had been signed by him and that these were forged. He also felt sorry for the act of forgery resulting in defrauding the Govt. on the basis of documents signed by him. He admitted that the applications for DEPB's in respect of Shipping Bill No. 2900 dated 3.9.1999, 156 dated 14.6.1999, 4040 dated 21.12.1999 and 4222 dated 16.11.1999 were signed by him. I further observe that another partner of the firm Sh. Mukesh Kumar (Noticee No. 5) also participated in the commissioning of the fraud by way of signing the applications for DEPB's in respect of Shipping Bill No. 33 dated 30.1.2000, 6728 dated 25.7.2000, 7248 dated 7.8.2000, 4739 dated 17.12.1999, 4687 dated 14.12.1999 and 4410 dated 27.11.1999 in the absence of Noticee No. 3. So both the Noticee No. 3 and 5 have actively connived with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeals of the revenue have been rejected. 8. Mr. Kamal Sehgal, learned counsel for the revenue has primarily argued that the assessee-respondents have placed reliance on a judgment of the Tribunal in the case of M/s Parker Industries and the order passed by the Tribunal in the aforementioned case was reversed by a Division Bench of this Court in the case of The Commissioner of Customs, Commissionerate, Amritsar v. M/s Parker Industries, Jalandhar (Custom Act Appeal No. 1 of 2006, decided on 7.11.2006), deciding the issue of penalty in favour of the revenue. According to the learned counsel once the assessee-respondents have been found to have indulged in forgery and other activities then the penalty proceedings are necessary consequence. The penalty proceedings could be validly initiated and penalty was rightly imposed by the Adjudicating Authority. He has further submitted that merely because reference to sub-sections of Section 112 of the Act was not made in the show cause notice, would not be suffice to declare the penalties as illegal unless the assessee-respondents are able to show that they had suffered a prejudice by omission to mention the sub-sections beca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Ashok Kumar on the basis of a fake Bank Certificate of Export and Realisation and the same were cancelled ab-initio by the licensing authority. It has also placed reliance on an admission made by respondent No. 2 in para 27 of its order (supra) admitting that the Bank Certificate of Export and Realisation were signed by him and that those were forged. Once the finding of fraud and forgery have come on record then the order of the Adjudicating Authority cannot be set aside either by the Appellate Authority or the Tribunal on technical grounds that under Section 112 of the Act, penalty could have been imposed only on the importer or any person who abets the importer. One principle which has been established beyond any doubt is that fraud vitiates all acts. Hon'ble the Supreme Court in the case of S.P. Chengalvaraya Naidu v. Jagannath, (1994) 1 SCC 1, in that regard has observed as under:- "Fraud avoids all judicial acts, ecclesiastical or temporal" observed Chief Justice Edward Coke of England about three centuries ago. It is the settled proposition of law that a judgment or decree obtained by playing fraud on the court is a nullity and non est in the eyes of law. Such a j ..... X X X X Extracts X X X X X X X X Extracts X X X X
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