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TMI Blog2024 (11) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... 2, 1776, 1766, 1767, 1768 & 1769 of 2016 For the Appellants : Mr.B.Hari Radhakrishnan For the Respondents : Mr.Rajnish Pathiyil (for R1) R2- Tribunal Case Nos. : 807, 783 & 808 of 2013 For the Appellants : Mr.Rajnish Pathiyil For the Respondents : Mr.S.Murugappan (for R1) R2- Tribunal Case Nos. : 89, 90, 85 & 88 of 2013 For the Appellants : Mr.B.Satish Sundar For the Respondents : Mr.Rajnish Pathiyil (for R1) Case Nos. : 816, 809, 789, 779, 822, 806, 813, 785, 821, 828 & 777 of 2013 For the Appellants : Mr.Rajnish Pathiyil For the Respondents : R1 - Person not found R2- Tribunal Case Nos. : 18 of 2013 For the Appellants : Mr.S.Murugappan For the Respondents : Mr.Rajnish Pathiyil Case Nos. : 826, 794, 795, 801, 802, 803, 791 & 827 of 2013 For the Appellants : Mr.Rajnish Pathiyil For the Respondents : : R1-Tapal not yet returned either served or unserved R2-Tribunal Case Nos. : 810, 784, 788, 823, 792, 829 & 778 of 2013 For the Appellants : Mr.Rajnish Pathiyil For the Respondents : R1-Incorrect address, R2 - Tribunal Case Nos. : 253 of 2013, 3123 of 2012 For the Appellants : Mr.S.Murugappan For the Respondents : Mr.Rajnish Pathiyil (for R2) R1- Tribunal Case N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and interest was confirmed, and the penalties were set aside in full. In the case of the traders/brokers/ sub-brokers too, the duty and interest was upheld, and the penalty was reduced to 50%. As against the aforesaid conclusions, cross appeals have been filed by (i) Satish Mohan Agarwal challenging the confirmation of the adjudicatory order in full (ii) by the importers/licence holders/traders aggrieved by that portion of the order confirming part of the duty/penalty and (iii) by the Revenue contesting the deletion of duty, interest and part/whole of the penalty. 6. The substantial questions of law admitted for consideration are as follows: 'C.M.A.No.84 of 2013 (appeal filed by Nemichand Desarlla, who is a License Broker) 1. Is the 2nd respondent Tribunal right in confirming penalty of Rs. 75,000/- on the appellant in terms of Section 112(a) of the Customs Act, 1962, especially when it has been shown and established that the appellant had no prior knowledge of the forged/fabricated nature of the DEPB Licence/TRAs, which was purchased in open market, being freely transferable, and more so when such licence/TRAs came in sealed cover? 2. Is the findings of the 2nd respondent T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, who are License Brokers) 1. Is the 2nd respondent Tribunal right in confirming penalty of Rs. 50,000/- on the appellant in terms of Section 112(a) of the Customs Act, 1962, especially when it has been shown and established that the appellant had no prior knowledge of the forged/fabricated nature of the DEPB Licence/TRAs, which was purchased in open market, being freely transferable, and more so when such licence/TRAs came in sealed cover? 2. Is the findings of the 2nd respondent Tribunal at paragraph 12 of the order impugned as against the appellant sustainable? In this connection, is the Tribunal correct in entering a finding that the appellant should have made enquiries with Customs Authorities and others as to the validity of the licence sustainable in light of the fact that the licence/TRAs were purchased and sold in the ordinary course of business and there was not even a reasonable belief entertained as to the nature of the said licence/TRAs at that point of time? 3. Is the Tribunal right in penalizing the appellant on the charge of abetment of use of forged/fabricated DEPB/TRA by the importer for obtaining duty free clearance or imports, when the Tribunal itself ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the 2nd respondent Tribunal vitiated on account of the fact that it has taken into consideration irrelevant and extraneous material while leaving out germane and relevant ones as expatiated in the grounds? 5.Is the 2nd respondent Tribunal as a final fact finding body expected to sift, weigh and examine the evidences and material in detail before rendering findings and has such an exercise been done in the facts and circumstances of the present case? 'C.M.A.No.87 of 2013 (appeal filed by P.Suresh Kumar, who is a Licence Broker) 1.Is the 2nd respondent Tribunal right in confirming penalty of Rs. 75,000/- on the appellant in terms of Section 112(a) of the Customs Act, 1962, especially when it has been shown and established that the appellant had no prior knowledge of the forged/fabricated nature of the DEPB Licence/TRAs, which was purchased in open market, being freely transferable, and more so when such licence/TRAs came in sealed cover? 2.Is the findings of the 2nd respondent Tribunal at paragraph 12 of the order impugned as against the appellant sustainable? In this connection, is the Tribunal correct in entering a finding that the appellant should have made enquiries wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly when it has been shown and established that the appellant had no prior knowledge of the forged/fabricated nature of the DEPB Licence/TRAs, which was purchased in open market, being freely transferable, and more so when such licence/TRAs came in sealed cover? 2.Is the findings of the 2nd respondent Tribunal at paragraph 12 of the order impugned as against the appellant sustainable? In this connection, is the Tribunal correct in entering a finding that the appellant should have made enquiries with Customs Authorities and others as to the validity of the licence sustainable in light of the fact that the licence/TRAs were purchased and sold in the ordinary course of business and there was not even a reasonable belief entertained as to the nature of the said licence/TRAs at that point of time? 3.Is the Tribunal right in penalizing the appellant on the charge of abetment of use of forged/fabricated DEPB/TRA by the importer for obtaining duty free clearance or imports, when the Tribunal itself has vacated the imposition of penalty on the importer consciously? 4.Has the Tribunal committed an error of jurisdiction inasmuch as no act of commission or omission or abetment of such is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a demand has been made by invoking the extended period in terms of Section 28 of Customs act and when it is established that non-payment of proper duty is not on account of collusion or wilful misstatement or suppression of facts by the importer himself or his agent, then, is it still open to the respondents to recover the duties involved by holding that there is a fraud by others and that vitiates everything? 2.When a demand has been issued in terms of the proviso to Section 28 of Customs Act, 1962, can the respondents confirm the demands by going beyond the scope of Section 28 holding that when fraud is involved, duty in any case has to be recovered? 3.When certain officials of the State itself are involved in the perpetuation of the fraud and when the appellants have acted on the basis of the documents emanating from the departments of the State, can the maxim "caveat emptor, qui ignorare non debuit quod jus alienum emit" (Let a purchaser beware; who ought not to be ignorant that he is purchasing the rights of another) be invoked? 4.Whether can the absence of due care or diligence be considered as substitutes for "collusion, wilful misstatement or suppression of facts" a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agarwal, who is the seller of DEPB scrips) (i) Whether the Officers of the Directorate of Revenue Intelligence have jurisdiction to issue demand/show cause notice, as they are not 'Proper Officers' as defined under Section 2 (34) of the Customs Act, 1962 and consequently whether the impugned order is liable to be set aside on this ground? (ii) Whether the Hon'ble Tribunal is right in upholding the imposition of penalty under Section 112 of the Customs Act, 1962 especially when Section 112 only empowers imposition of penalty on a person who acts or omits to do any act in relation to goods so as to render such goods liable to confiscation under Section 111? (iii)Whether the Hon'ble Tribunal is right in holding that the demand is not barred by limitation in the face of requirement in sub-section 4 of Section 28 of the Customs Act, 1962 which states that the demand can be raised within a period of five years from the relevant date in a case where the duty was not paid by reason of collusion or wilful misstatement or suppression of facts by the importer or the agent or his employee in spite of the fact that the appellant did not colluded or make wilful misstatement or cause suppre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt content of the product exported under the Scheme. An exporter applies for credit against exports, of the specified rates of import of raw materials, components, parts, packing material etc. The credit is sought with the Director General of Foreign Trade at the specified port, being the port of export. 9.The policy provides for DEPB scrips to be issued against exports. The scrips are freely transferable. DEPB scrips may also be issued by the DGFT against imports from ports other than the ports of export under the TRA facility as per the terms and conditions of relevant Notifications. 10.There was an investigation that was launched into the subject TRAs in the Chennai Port for clearance of imports. The investigation revealed that the TRAs were forged and fabricated, indicating that the DEPB scrips to which the TRAs related had not been transferred by the owner of the scrips to the importers in question. 11. This triggered a chain of events involving the importer, trader, brokers and sub-brokers all of whom had a hand in the fabrication and forgery. The subject TRAs were stated to be in connection with DEPB scrips registered in Nhava Sheva, Mumbai, which scrips had not been tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .The conclusions of the CESTAT are based upon the results of investigation which have established conclusively that the DEPB scrips and TRAs were fabricated and forged. The parties were thus held to be liable on the ground of fraud which, rightly has been held to vitiate the transactions in full. 19.The orders of the lower authorities and the order of the Tribunal, the final fact finding authority establishes clearly that the documents were fake. The explanations tendered by the individual appellants have also found to have no credence and nothing new is placed before us to persuade as to take a different view in this matter. 20.The questions of law raised for our consideration touch upon the factual findings rendered by the authorities. We see no reason to intervene in those findings as no perversity has been made out in any of the findings or in the appreciation of the facts and circumstances based upon which those findings have been rendered. 21.There is no question of law that arises for determination save what has been answered in the paragraphs to follow. The component of duty and interest have been confirmed in all cases and we find no cause to intervene. Some portion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umar Jain 24 730 of 2012 799 of 2013 Mr.Suresh 25 731 of 2012 800 of 2013 M/s.Saptagir Camphor Ltd. 26 732 of 2012 801 of 2013 Mr.Sashi Prakash Lohia 27 734 of 2012 802 of 2013 Mr.Sashi Prakash Lohia 28 735 of 2012 803 of 2013 Mr.Neemichand Jain 29 736 of 2012 804 of 2013 Mr.P.Suresh Kumar 30 737 of 2012 805 of 2013 Mr.V.Venkatanarayana 31 738 of 2012 806 of 2013 M/s.Andhra Pradesh Paper Mills Ltd. 32 740 of 2012 807 of 2013 M/s.G.Tech Stone Ltd. 33 741 of 2012 808 of 2013 Mr.M.Vasudevan 34 742 of 2012 809 of 2013 Mr.Neemichand Jain 35 743 of 2012 810 of 2013 Mr.Sashi Prakash Lohia 36 744 of 2012 811 of 2013 Mr.Pradeep Kabra 37 745 of 2012 812 of 2013 Mr.Neemichand Jain 38 746 of 2012 813 of 2013 Mr.Sashi Prakash Lohia 39 748 of 2012 814 of 2013 Mr.Suresh 40 749 of 2012 815 of 2013 Mr.Ashok Kumar 41 750 of 2012 816 of 2013 Mr.Sashi Prakash Lohia 42 752 of 2012 817 of 2013 Mr.Sohan Lal 43 753 of 2012 818 of 2013 Mr.Ashok Kumar Jain 44 754 of 2012 819 of 2013 Mr.P.Suresh Kumar 45 755 of 2012 820 of 2013 Mr.Neemichand Desarlla 46 756 of 2012 821 of 2013 Mr.Sashi Prakash Lohia 47 758 of 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... established by the appellants for which they submitted themselves to the loss of duty caused to Revenue by their act of use of DEPB scrips not acquired legitimately.' 27.The Tribunal quotes the former Lord Chief Justice of England, Sir Edward Coke, that 'fraud avoids all judicial acts, ecclesiastical or temporal' and the judgment of the Supreme Court in S.P.Chengalvaraya Naidu v. Jagannath [AIR 1994 SC 853]. 28.Having stated that the importers had not conducted due diligence from the market and also having referred to the evidence gathered by Revenue that established the falsity of the scrips, we do not find any justification in the Tribunal having deleted the penalty on importers in full. The exercise of discretion as in the case of the traders/brokers would have been appropriate in the case of importers as well. Hence, we restore the penalty to the extent of 50% of the same in line with the penalty confirmed in the case of the brokers and traders. The revenue appeals are disposed as above. 29.One of the submissions made is that some of the co-noticees had approached the Settlement Commission for settlement of the issues arising from the common show cause notice and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ettlement of cases.- (1) Any importer, exporter or any other person (hereinafter referred to as the applicant in this Chapter) may, in respect of a case, relating to him make an application, before adjudication to the Settlement Commission to have the case settled, in such form and in such manner as may be specified by rules, and containing a full and true disclosure of his duty liability which has not been disclosed before the proper officer, the manner in which such liability has been incurred, the additional amount of customs duty accepted to be payable by him and such other particulars as may be specified by rules including the particulars of such dutiable goods in respect of which he admits short levy on account of misclassification, under-valuation or inapplicability of exemption notification [or otherwise] and such application shall be disposed of in the manner hereinafter provided:' 34.Section 127-B is clear in stipulating that the application for settlement should be in respect of a case relating to an importer, exporter or any other person. 'Case' has been defined under Section 127-A(b) to mean any proceeding under the Act or any other Act for the levy, assessment and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings are then deemed to be continuing. Undoubtedly, at one place the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order seems does state that the show cause notice should be pending adjudication. However, the same order also talks of the show cause notice being in respect of same matter on which the show cause notice has been issued to the main declarant. Then the Order provides that a settlement in favour of the declarant will be deemed to be full and final in respect of other persons also. This Order has to be read as a whole. If read as a whole, it is clear that a settlement by the main declarant is to operate as full and final settlement in respect of all other persons on whom show cause notice was issued in respect of the same matter. Thus read as a whole the words "pending adjudication" cannot be read to exclude cases where the proceedings are still pending in Appeal. Even otherwise the order has to be read along with the Kar Vivad Samadhan Scheme. Under the Kar Vivad Samadhan Scheme a party can file a declaration so long as the proceedings are pending. Thus, even though the show cause notice may have been adjudicated upon and an Appeal is pending a party could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulation in the Removal of Difficulties Order that an application under the Samadhan scheme would cover all other co-noticees as well. 43.The interpretation as above would not apply to the scheme of settlement under the Customs Act in light of there being no such express sanction of the nature available under the Kar Vivad Samadhan (Removal of Difficulties) Order. We are thus of the view that the conditions governing the Kar Vivad Samadhan Scheme are different from the scheme of settlement under Chapter XIV-A dealing with Settlement of cases. 44.The consequences of extension of benefit of settlement to co-noticees who have not approached the Settlement Commission, is that they too would be offered immunity if the declarant has been granted the same, without even having approached the Settlement Commission. There is thus no merit in the contention that an order passed by the Settlement Commission in the case of one declarant would apply in the case of other co-noticees as well. This question of law is answered in favour of the revenue. 45.The CESTAT had also ordered that appropriate disciplinary action be taken as against the officials of the Customs House and the Department of Re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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