9911796707
TMI Blog2023 (7) TMI 1481X X X X Extracts X X X X X X X X Extracts X X X X ..... licenses, are bonafide purchaser of the licenses in question and imported the goods and cleared thereof. Therefore, subsequent suspension or cancellation of the license cannot affect the imports made prior to such suspension and cancellation. In the case of Friends Trading Company [ 2011 (2) TMI 382 - PUNJAB HARYANA HIGH COURT] , the scrips obtained by the appellants, were held to be void ab-initio. There is a big difference between the forged scrip which is ab-initio void at the time of import whereas the DEPB obtained on the basis of fraudulently by the exporter and sold to the appellants and transferrable to DGFT, may be voidable unless the same has been cancelled by the issuing authority. Accordingly, the same cannot be equated altogether. Further, the case of Tata Iron Steel Company Limited [ 2015 (8) TMI 290 - SC ORDER] relied upon by the ld.A.R. for the Revenue, has no relevance in the facts and circumstances of this case as in that case the license holder has deliberately suppressed the fact of having availed movat credit and made willfully wrong declaration to the licensing authority to obtain the endorsement of transferability of the same while transferring the licenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Free Import Authorization scheme (DFIA) through Haldia dock by resorting to misdeclaration of description, quantity and value of goods. Intelligence further suggested that Shri Alok Kedia, son of Shri Ram Narayan Kedia was the key person involved in the fraudulent export activities. 2.2 Acting on the aforesaid intelligence, discreet surveillance was maintained in and around haldia dock and on 30th December, 2010, four consignments in 20 containers attempted to be exported to Malaysia by Maa jawala Enterprises under the cover of shipping bill nos. E-189, E191 & E-192, all dated 27th December, 2010 were identified at Haldia dock complex. Description of the goods declared in the shipping bills was "Processed Betel Nut (Supari) Powder and declared quantity was collectively 400MT in 8000 bags. The overseas buyer was Ned Marine Logistic, NBR 1 Jalanzamrud, Taman Gembira-41200, Kalang, Selkngore, D.E. Malaysia and declared FOB value was collectively Rs. 2,06,79,250/-. The aforesaid shipping bills had been assessed provisionally by the concerned officers of customs and had been allowed for shipments after drawing samples. 2.3 The impugned export consignments were detained on 30th Decembe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterprises' for invoking provisions of rule 7 (1) (K) of the Foreign Trade (Regulation) Act, 1993 and also to initiate action under Section 9 of the Foreign Trade (Development and Regulation)Act vide letter No. 18/98/2010-2011 ECA/CAL/part-II/2728 dated 17.3.2011. Pursuant to issue of the said show cause notices also defaulter order was issued by the Deputy Director General of Foreign Trade, Kolkata and was communicated vide letter No. 18/98/2010-2011/ECA/CAL/284 dated 7.7.2011. 2.5 During further investigation, it was revealed during investigation that Maa Jawala Enterprises had obtained 18 licenses under DFIA against fraudulent exports of betel nut powder out powder out of which 13 were made transferable and sold to various persons namely (i) M/s Shyam Trader, (ii) M/s Baba Traders, (iii) M/s Wadhwani Commodities trading Pvt. Ltd., (iv) Perfect Cardamom & Spices Manufacturing Co. Pvt. Ltd., and (v) Bajrang Expo. One license ws utilized by them for import of betel nut themselves and 4 licenses could not be utilized due to interception of the export consignment by DRI, The details of licenses utilized for import are as under:- Sl No. License No. Name of the Importer Duty (in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e demand of duty of Rs. 83,34,346.35 that is foregone on account of utilizing DFIA license No. 0210134793 dated 03.12.2009 and 0210149322 dated 13.10.2010 for the import of betel nuts vide Bill of Entry No. 772679 dated 02.08.2010 and warehouse Bill of Entry No. 834582 dated 10.09.2010 (Ex-bond Bill of Entry No. 633092 dated 29.12.2010) through Nhava Sheva Port vide Notification No. 98/2009-Cus dated 11.09.2009 and to be paid by them under erstwhile proviso to Section 28(1) and now under Section 28(4) of the Customs Act, 1962 alongwith interest at applicable rate. (ii) He also ordered the enforcement of Bank Guarantee No. 00281GPER00211 dated 23.03.2011 for Rs. 13,95,517/- issued by Bank of Baroda, Girish Park Branch, 219 C.R. Avenue, Kolkata - 6 and furnished by Shree Shyam Trader for provisional release of the consignment covered by warehouse Bill of Entry No. 834582 dated 10.09.2010 (Ex-bond Bill of Entry No. 633092 dated 29.12.2010) towards adjustment of the duty so payable on the said import consignment. (iii) He ordered confiscation of the betel nuts imported vide Bills of Entry No. 772679 dated 02.10.2010 and warehouse Bill of Entry No. 834582 dated 10.09.2010 (Ex-bond B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 010 (Ex-bond Bill of Entry No. 631006 dated 28.12.2010), 848556 dated 18.09.2010 (Ex-bond Bill of Entry No. 631009 dated 28.12.2010) and 867074 dated 28.09.2010 (Ex-bond Bill of Entry No. 631010 dated 28.12.2010) assessable value being collectively totaling Rs. 1,15,03,483,58 utilizing DFIA license No. 0210139171, 0210139153 and 0210139155 all dated 11.03.2010 and 0210149322 dated 13.10.2010 and provisionally released to the importer under Section 111(o) of the Customs Act, 1962. However, I offer the option of redemption in lieu of confiscation on payment of fine of Rs. 23,00,000/- under Section 125 of the Customs Act, 1962. (iv) He imposed a token penalty of Rs. 50,000/- on Shri Soumen Das, Notices No. 6 under Section 112(a) of the Customs Act, 1962. (v) He imposed penalty of Rs. 5,00,000/- on Shri Satyendra Goel Noticee No. 8 under Section 112 (a) of the Customs Act, 1962. M/s Wadhwani Commodities Trading Pvt. Ltd, (i) The Ld.Commissioner confirmed the demand of duty collectively totaling Rs. 82,87,786.24 foregone on account of import of betel nuts vide Bill of Entry No. 942970 dated 10.11.2010, 722767 dated 3.7.2010, 756923 dated 24.07.2010 and 797243 dated 20.08.2010 thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 11.09.2008 and utilizing DFIA licenses No. 0210117811 dated 22.09.2008, 0210122723 and 0210122724 both dated 30.01.2009 and to be paid by them under erstwhile proviso to section 28(1) and now under Section 28(4) of the Customs Act, 1962 along with interest at applicable rate. (ii) He ordered confiscation of the betel nuts imported vide Bills of Entry No. 632768 dated 12.05.2010, 622922 dated 22.12.2010, 606580 dated 14.12.2010, 622922 dated 22.12.2010 and 924086 dated 28.10.2010 through Nhava Sheva port, assessable value being collectively Rs. 1,14,79,147.57 utilizing DFIA licenses No. 0210117811 dated 22.09.2008, 02101122723 and 0210122724 both dated 30.01.2009 under Section 111(o) of the Customs Act, 1962. However, I refrain from confiscation as the said goods are physically not available for confiscation as they were already cleared for home consumption. (iii) He imposed penalty of Rs. 7,50,000/- on Shri Mayur G Desai Noticee No. 12 under Section 112(a) of the CA, 1962. M/s Bajrang Expo (i) The ld.Commissioner confirmed the demand duty of Rs. 10,54,231,43 foregone on account of import of betel nuts by M/s Bajrang Expo vide Ex-bond Bill of Entry No. 724368 dated 06.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tigation. All the licenses have been purchased by the appellants against the consideration. 9. It is submitted that the value of DFIA licenses for transfer is not based on the amount of duty saved. The premium of any DFIA license is determined basis the prevailing market price and cannot be linked to the duty forgone. The DFIA license under dispute are for import of Betel Nuts (Split), which is prone to smuggling from Nepal and Bangladesh, due to which the premium on DFIA licenses covering duty free import of betelnuts is low. 10 It is further submitted that the license obtained by mis-declaration/mis-representation is only voidable and not void ab-initio. 11. It is settled law that even a license which is obtained by misdeclaration or mis-representation of facts is only voidable and not void. It is good in law until it is avoided/ cancelled. 12. On the other hand, the Ld.A.R. for the Revenue, submitted that it is on record that DFIA license obtained by M/s Maa Jawala Enterprises fraudulently by mis-declaring exports of goods. Therefore, the licenses have been obtained by fraud. In that circumstances, the duty forgone is recoverable from the appellants. To support his contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble Supreme Court in the case of East India Commercial Company Ltd vs CC, 1983 (13) ELT 1342 (SC), wherein the Hon'ble Apex Court has held as under: "35. Nor is there any legal basis for the contention that licence obtained by misrepresentation makes the licence non est, with the result that the goods should be deemed to have been imported without licence in contravention of the order issued under Section 3 of the Act so as to bring the case within Clause. (8) of Section 167 of the Sea Customs Act. Assuming that the principles of law of contract apply to the issue of a licence under the Act, a licence obtained by fraud is only voidable: it is good till avoided in the manner prescribed by law. ………………." 17.1 Further in the case of Union of India v Sampat Raj Dugar, 1992 (58) ELT 1663 (SC), wherein the Hon'ble Apex Court has observed as under: "21. …………………No such prohibition can be pleaded in this case since on the date of the import the said goods were covered by a valid import licence. The subsequent cancellation of licence is of no relevance nor does it retrospectively render the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the suspension and/or cancellation of the licences in question, thus the imports were made under valid licences, the goods could not be subjected to levy of customs duty in the peculiar facts and circumstances of the cases in hand. In the circumstances, we hold that in all cases at hand, the goods were imported, under valid licences. The goods imported were neither prohibited nor restricted by or under the Customs Act, as such, it was not open for the Customs Authorities to withhold clearance thereof. 17.4 Further in the case of Pee Jay International Vs. Commissioner of Customs, 2016 (340) ELT 625 (P & H), the Hon'ble High has dealt this issue and observed as under: "8. The facts, which are not in dispute are that the appellant purchased DEPB Scrip No. 3010006203, dated 10-10-2000 from M/s. Beni Exports, Jalandhar. It was utilised to discharge duty liability on the goods imported by the appellant vide Bill of Entries dated 12-10-2000 and 19-10-2000. More than one year thereafter, Director General of Foreign Trade cancelled DEPB issued to M/s. Beni Exports, Jalandhar vide order dated 24-102001. As a result thereof, the appellant was issued show cause notice dated 14-11-2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arty to the fraud and there was categoric finding that he had purchased DEPB from the open market in bona fide belief of its being genuine. Reliance was placed upon an earlier judgment of this Court in Leader Valves Ltd.'s case (supra). There also, similar findings were recorded. 11. The same view was later followed in Fertichem India and M/s. Deebee Marketing Pvt. Ltd.'s cases (supra). 12. The judgment of this Court in Munjal Showa Limited's case (supra) is distinguishable on facts as in that case, transfer release advices issued against DEPB scrip were forged and even DEPBs were also forged. There was no finding recorded by the Tribunal or the authorities in that case that the assessee acted bona fide. The earlier judgments of this court in Vallabh Design Products and Leader Valves Ltd.'s cases (supra) were distinguished while recording that the importer in those cases had acted bona fide. Paragraph 15 thereof is extracted below: "15. We may also make a brief reference to the judgments of this court in Vallabh Design Products (supra) and Leader Valves Ltd. (supra), wherein a finding was clearly recorded that the importer had acted bona fide which finding was affirmed." 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not connected with any such event or an act. Law cannot envisage an almost impossible eventuality. The onus upon the assessee gets discharged on production of Form VAT C-4 which is required to be genuine and not thereafter to substantiate its truthfulness by running from pillar to post to collect the material for its authenticity. In the absence of any mala fide intention, connivance or wrongful association of the assessee with the selling dealer or any dealer earlier thereto, no liability can be imposed on the principle of vicarious liability. Law cannot put such onerous responsibility on the assessee otherwise, it would be difficult to hold the law to be valid on the touchstone of articles 14 and 19 of the Constitution of India. 26. The rule of interpretation requires that such meaning should be assigned to the provision which would make the provision of the Act effective and advance the purpose of the Act. This should be done wherever possible without doing any violence to the language of the provision. A statute has to be read in such a manner so as to do justice to the parties. If it is held that the person who does not deposit or is required to deposit the tax would be p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operation as it is now well settled that in absence of any provision contained in the legislative Act, a delegatee cannot make a delegated legislation with retrospective effect. 20. In Mahabir Vegetable Oils (P) Ltd. v. State of Haryana this Court stated: (SCC p. 633, paras 41-43) "41. We may at this stage consider the effect of omission of the said note. It is beyond any cavil that a subordinate legislation can be given a retrospective effect and retroactive operation, if any power in this behalf is contained in the main Act. The rule-making power is a species of delegated legislation. A delegatee therefore can make rules only within the four corners thereof." 29. Similarly it was held in DDA v. Joint Action Committee, Allottee of SFS Flats, (2008) 2 SCC 672, as under: "76. An executive officer, in absence of any provision of a statute, cannot apply his own decision with retrospective effect. A delegatee is bound to act within the four corners of the delegation and not beyond the same. 77. Delegation of power in favour of an authority under a statute must also be tested in terms of the statutory provisions. No provision under the Act or the Regulations has been brought t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licence. In Clause (2) "the Director General or an officer authorised by him" is competent to "grant or renew or refuse to grant or renew, a licence to import and export such class or classes of goods, as may be prescribed, after recording in writing his reasons for such refusal." A licence granted under Section 9 has to be in a prescribed form. It is valid for the period which may be specified therein. Terms, conditions and restrictions can also be imposed. The provision also authorises the competent authority to suspend or cancel a licence. Section 19 authorises the Central Government to "make rules for carrying out the provisions of the Act." 10. In exercise of the powers conferred by the Act, the Central Government has framed the rules called the Foreign Trade (Regulation) Rules, 1993. Rule 8 is material for the purposes of this case. It provides as under:- "Rule 8: Amendment of licence: The licensing authority may of its own motion or on an application by the licensee, amend any licence in such manner as may be necessary or to rectify any error or omission in the licence". 11. On a perusal of the provisions of the Act and the rules, we do not find any power with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the present case is regarding the utilisation of DFIA license Nos. 0310606860 dated 20.12.2010 and 0310606862 dated 20.12.2010 in the case of Neev Trading Co., and Licences Nos.0310603943 dated 01.12.2010 and No. 0310610819 dated 13.01.2011 in the case of Vids Overseas, which were issued by the Director General Foreign Trade (DGFT) for an amount (as specified in paras 6 and 9 above), which was later on transferred to the appellant for consideration at premium of 97% approx. The amount of consideration for purchasing of the said licenses from the transferor was paid through Cheque or banking channel. The said license(s) was utilised by the appellants towards the import duty vide Bills of Entry filed during January, 2011 to August, 2011. It is not in dispute that these license(s) has been obtained by the exporters on the basis of fake export documents. The Department has taken up the matter for cancellation of the DFIA license(s) with DGFT by the DRI on 16.02.2012. In other words, the above license(s) are genuine licence in the record of DGFT. 29. Nowhere it is the case of the Department that these appellants colluded with any of the persons concerned, for alleged fraud/ forge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee-respondent admittedly is not a party to the fraud. There are categorical finding that they had purchased DEPB from the open market in the bona fide belief of its being genuine. They had paid full price and accordingly have availed the benefit. Merely because at a later stage, the DEPB has been found to be fabricated and fake on the basis of BCER the assessee respondent could not be deprived of the benefits which were legitimately available to them. It is also worth noticing that the assesseerespondent was never issued any show cause notice before cancelling the DEPB which was obtained by M/s. Parker Industries and obviously the notice was also to be issued to them alone. We are further of the view that notice under Section 28 of the Customs Act could not be issued to the assesseerespondent because a period of six months stipulated by Section 28 of the Customs Act stood already expired and the rights of the parties had been crystallized. The revenue cannot avail the extended period because the assessee-respondent could 23 not be accused of mis-representation, collusion or suppression of facts within the meaning of proviso postulated by Section 28 of the Customs Act. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made transferrable by the DGFT and were valid at the time of import effected by the appellants. Therefore, the decision of the case Munjal Showa Ltd. (supra) cannot be equated in this case. 18.1 Further in the case of Friends Trading Company (supra), the scrips obtained by the appellants, were held to be void ab-initio. There is a big difference between the forged scrip which is ab-initio void at the time of import whereas the DEPB obtained on the basis of fraudulently by the exporter and sold to the appellants and transferrable to DGFT, may be voidable unless the same has been cancelled by the issuing authority. Accordingly, the same cannot be equated altogether. 18.2 Further, the case of Tata Iron & Steel Company Limited (supra) relied upon by the ld.A.R. for the Revenue, has no relevance in the facts and circumstances of this case as in that case the license holder has deliberately suppressed the fact of having availed movat credit and made willfully wrong declaration to the licensing authority to obtain the endorsement of transferability of the same while transferring the licenses to the appellants and the issue before the Hon'ble Supreme Court was that in such cases the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
