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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 ..... including the preparation of the fake DEPB scrips and TRAs. Penalty was also upheld. HELD THAT:- There is no question of deriving any credit from forged scrips. While one may defend his case stating that there was no collusion or fraud, the liability for duty, interest and other statutory consequences are unavoidable. 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. 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. 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 fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oticee may or may not contain the same ingredients as in the case of other co-noticees. Section 127-C sets out the procedure to be followed by the Settlement Commission on receipt of an application under Section 127-B in minute detail, such as admission, calling for report from the Commissioner in regard to the application, examination of records and report of the Commissioner and thereafter passing of an order. Thus, in our considered view, there is a vast difference between the Kar Vivad Samadhan Scheme and the scheme of Settlement as envisaged under the Customs Act. 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. - And C.M.A.Nos.3123 3653 of 2012 And CMA.Nos.1770, 1765, 1766, 1771, 1775, 1773, 1774, 1772, 1776, 1767, 1768 1769 of 2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n For the Respondents : Mr.Rajnish Pathiyil Case Nos. : 776 of 2013 For the Appellants : Mr.Rajnish Pathiyil For the Respondents : Mr.Joseph Prabhakar (for R1) R2- Tribunal COMMON JUDGMENT DR.ANITA SUMANTH., J. This order disposes 78 Civil Miscellaneous Appeals filed at the instance of importers, licence brokers and traders, as well as the Commissioner of Customs challenging an order passed on 14.06.2012 by the Customs Excise and Service Tax Appellate Tribunal (CESTAT/Tribunal) at Chennai. Since C.M.A No.1766 of 2016 involving identical issues was not listed on that date, the matter was directed to be listed in a special list and forms part of the batch being disposed today by way of this common order. 2. The CESTAT, by way of the impugned order, disposed 67 appeals preferred by importers and traders of Duty Entitlement Pass Book (DEPB) scrips and Telegraphic Release Advice (TRA) challenging adjudication orders, alleging that the TRAs and DEPBs had been forged and constituted fabricated instruments. 3. Under the orders of adjudication, the authorities had confiscated the DEPB licences and TRAs and had raised demands of Customs Duty under Section 28(1) of the Customs Act, 1962 (Act) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion inasmuch as no act of commission or omission or abetment of such is attributable to the appellant qua the liability of the goods imported for confiscation. In this regard, has the tribunal overlooked the fact that penalty under section 112 is confiscation related and inasmuch as there is no specific order of confiscation of the imported goods, can the appellant be made liable for penalty? 5. Is the order of 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? 6. 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? 7. Is the 1st respondent Tribunal right in holding that the appellant would still be liable for penalty, in spite of the fact that the main importer in the present case, who had approached the Settlement Commission, which had granted immunity from fine, penalty and confiscation? 8. Does, the Show Cause Notice and allegations su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ences 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.86 of 2013 (appeal filed by Saptagir Camphor Ltd., who is an Importer) 1. Is the 2nd respondent Tribunal right in confirming duty and interest on the appellant, 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 10 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/DGFT 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..Has the Tribunal committed an error of jurisdiction inasmuch as no a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fiscation related and inasmuch as there is no specific order of confiscation of the imported goods, can the appellant be made liable for penalty? 5.Is the order of 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? 6.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? 7.Is the 1st respondent Tribunal right in holding that the appellant would still be liable for penalty, in spite of the fact that the main importer in the present case, who had approached the Settlement Commission, which had granted immunity from fine, penalty and confiscation? 8.Does, the Show Cause Notice and allegations survive against persons, who had not approached the Settlement Commission, in the case where the main party approaches the Settlement Commission by filing a settlement application against the show cause notice and gets the case settled with grant of immunit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty, in spite of the fact that the main importer in the present case, who had approached the Settlement Commission, which had granted immunity from fine, penalty and confiscation? 8.Does, the Show Cause Notice and allegations survive against persons, who had not approached the Settlement Commission, in the case where the main party approaches the Settlement Commission by filing a settlement application against the show cause notice and gets the case settled with grant of immunity from penalty, fine, confiscation etc.? C.M.A.No.3653 of 2012 (appeal filed by K.I.International Ltd, who is an Importer) 1.Whether the goods imported by the appellant and duty paid under the DEPB licences which were not cancelled as false or fabricated or fake by DGFT, could be subjected to levy of Customs duty again? 2.Whether in the absence of knowledge on the part of the appellant that the licences purchased by them were fake or forged, the appellant be held liable, by invoking larger period of limitation and consequently, the demand is barred by limitation? 3.Whether the newly introduced Section 28 AAA of Customs Act effective from April, 2012 will operate retrospectively to levy duty on the goods im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 782, 784, 785, 787, 788, 789, 791, 792, 794, 795, 797, 798, 799, 801, 802, 803, 804, 805, 808, 809, 810, 811, 812, 813, 814, 815, 816, 817, 818, 819, 820, 821, 822, 823, 824, 825, 826, 827, 828 829 of 2013 (appeals filed by the Revenue) 1.As to whether the CESTAT was correct in setting aside the penalty imposed under Section 112(a) of the Customs Act, 1962 in the absence of any provision empowering such exercise of discretion under the Customs Act, 1962? 2.As to whether in the facts and circumstances of the case, the Tribunal was justified in setting aside the penalty without assigning any reason whatsoever when the finding rendered is contrary to the said order? 3.As to whether the Tribunal ought to have construed Section 112A in light of Section 114A and the Tribunal ought to have concluded that the penalty cannot be set aside? 4.As to whether the penalty contemplated under Section 112(a) of the Customs Act, 1962 which envisages imposition of penalty equal to the duty payable as determined under subsection (2) of Section 28, and the interest payable thereon under Section 28AB or five thousand rupees whichever is higher, allows any scope for discretion to the adjudication author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determine the penalty to an amount other than that which is mandated under Section 112(a) of the Customs Act, 1962? 7.The conclusion of the CESTAT in the appeals are as follows: 14.5 In view of the above findings, we hold that the importer appellants are liable to pay the duty and interest adjudged against the imports made by them covered by the adjudications under appeal and the traders, brokers and sub-brokers of fake TRAs and DEPB scrips are liable to be penalised being instrumental in providing such instruments. We uphold the Orders-in-Original. However, in the fitness of the circumstances of the cases and to meet the ends of justice- (1)Penalties are set aside against the importer-appellants while confirming the duty and interest demanded from them. (2)We uphold the penalties imposed on appellant Shri Satish Mohan Agarwal in view of his pivotal role in the entire fraud beginning from making the fake, forged, false, fabricated and fraudulent DEPB scrips/TRAs. (3)Penalties against the following abettor traders/Brokers/Sub-brokers in appeal are reduced by half as indicated hereunder. 7.We first address the appeals of the importers/traders/licence agents/brokers. In this regard, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 46 of the Customs Act, which requires the importer to make a declaration in regard to the contents of the bill of entry. They argue that the declaration had evidently been false and thus the confirmation of the penalty by the CESTAT was in order. 15.In the context of the above rival submissions, useful reference may be made to the decision of the Punjab High Court in Friends Trading Company v. Union of India (254 ELT 652). After referring to the judgments of the Supreme Court in the cases of S.P Chengalvaraya Naidu vs Jagannath (AIR 1994 SC 853) and Commissioner of Customs v. Essar Oil Ltd. (172 ELT 433), the appeal was dismissed. The SLP as against that decision has also been dismissed by the Supreme Court in 258 ELT A 72. 16.In ICI India v. Commissioner of Customs (Port, Chennai) (184 ELT 339), the substantial question of law related to duty liability in the context of fake DEPB scrips. It was contended by the assessee in that case that there was no collusion on the part of that assessee and hence no portion of the liability would accrue to it and that it would be entitled to the benefit of the scrips. 17.This contention was rejected, the Court holding that there is no question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Court deems fit in the facts and circumstances and thus render justice. List of CMAs filed by Revenue Sl. No. Final Order No. CMA.No. Name of the 1 st Respondent 1 701 of 2012 776 of 2013 M/s.K.I.International Ltd. 2 702 of 2012 777 of 2013 Mr.Sashi Prakash Lohia 3 704 of 2012 778 of 2013 Mr.Neemichand Jain 4 705 of 2012 779 of 2013 Mr.Sashi Prakash Lohia 5 706 of 2012 780 of 2013 M/s.Sri Devi Extractions Pvt. Ltd. 6 708 of 2012 781 of 2013 Mr.Sohan Lal 7 709 of 2012 782 of 2013 Mr.P.Suresh Kumar 8 710 of 2012 783 of 2013 M/s.Suchitra Silk Pvt. Ltd. 9 712 of 2012 784 of 2013 Mr.Neemichand Jain 10 713 of 2012 785 of 2013 Mr.Sashi Prakash Lohia 11 714 of 2012 786 of 2013 M/s.Prashra Overseas Pvt. Ltd. 12 715 of 2012 787 of 2013 Mr.Pradeep Kabra 13 716 of 2012 788 of 2013 Mr.Neemichand Jain 14 717 of 2012 789 of 2013 Mr.Sashi Prakash Lohia 15 718 of 2012 790 of 2013 M/s.Symrise Pvt. Ltd. 16 720 of 2012 791 of 2013 Mr.Sashi Prakash Lohia 17 721 of 2012 792 of 2013 Mr.Neemichand Jain 18 722 of 2012 793 of 2013 M/s.Delphi TVS Diesel Systems Ltd. 19 724 of 2012 794 of 2013 Mr.Sashi Prakash Lohia 20 725 of 2012 795 of 2013 Mr.Neemichand Jain 21 726 of 2012 796 of 2013 M/s.M.K.Oil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the traders and brokers. As far as the traders and brokers are concerned, we do not find the discretion exercised to be perverse. 25.However, as far as the importers are concerned, the Tribunal has deleted the penalty in full and we see no justification for the same. The discussion in regard to the liability of the importers has been set out at paragraph 10 and the Tribunal notes that the evidence gathered by Revenue unambiguously and succinctly proved that the TRAs used by the importer / appellants were fake, false, forged and fabricated. 26.The Tribunal stated at paragraph 10.3 as follows: ' When the importer appellants acquired DEPB scrips from market without being acquired from original acquirer, as an abundant caution, to avoid evil consequence of fraudulently obtained scrips, could have safeguarded their interest causing enquiry from JDGFT as to genuineness of the scrips. But that was not done. Such appellants failed to acquire title over the scrips but became beneficiary of ill got scrips. Notificational benefit was availed at the cost of public exchequer which is required to be surrendered for the undue gain made. Bona fides were not established by the appellants for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the benefit of that acceptance would enure even to the officers of the company so long as other stipulations under the scheme were satisfied. 31.The Department on the other hand, had contended that the scheme would be applicable qua a specific applicant alone. The Bench observed that, both views were probable views and concluded that the benefit must enure to the individual, in light of the settled position that if two views were possible, the one in favour of the assessee must be adopted. 32.Their conclusion was based on the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order where, if a declaration had been made in respect of certain tax arrears, and where in respect of the same arrear, a show cause notice had been issued to any other person, then the settlement in favour of the declarant would be deemed to be full and final in respect of other persons on whom show cause notices had been issued. Thus, an order providing a settlement in favour of the declarant will be deemed to be full and final in respect of the other persons as well. 33.Section 127-B of the Customs Act reads as follows: 127-B. Application for settlement of cases. (1) Any importer, exporter or any other p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 127-C sets out the procedure to be followed by the Settlement Commission on receipt of an application under Section 127-B in minute detail, such as admission, calling for report from the Commissioner in regard to the application, examination of records and report of the Commissioner and thereafter passing of an order. 39.Thus, in our considered view, there is a vast difference between the Kar Vivad Samadhan Scheme and the scheme of Settlement as envisaged under the Customs Act. At paragraph 14 of the judgement in Onkar S.Kanwar the Supreme Court states as follows: 14.We have heard the parties. In our view, a reading of the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order shows that where a declaration had been made in respect of a tax arrear and where in respect of the same matter a show cause notice had also been issued to any other person, then the settlement in favour of the declarant has to be deemed to be full and final in respect of other persons on whom show cause notices had been issued. It is settled law that when an Appeal is pending there is no finality to the proceedings. The proceedings are then deemed to be continuing. Undoubtedly, at one place the Kar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Settlement mechanism is that, while the KVS Scheme provides for settlement of tax arrears of each individual person, including those of co-noticees, settlement mechanism provides for settlement of the entire case as a whole, the fact that only the person liable to pay duty can make an application for settlement does not mean that the case in so far as the remaining co-noticees can continue even after a final order of settlement has been passed in relation to the case. 41.In Omkar S.Kanwar, the Supreme Court held that an application filed by the Company under the Kar Vivad Samadhan Scheme, would accrue to the benefit of the Director as well. In doing so, they specifically noticed that the object of the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order is to extend the benefit of a settlement by the declarant to all other co-noticees. 42.Thus, any restriction placed on the benefit, as extending only to cases where the show cause notice is pending adjudication, would be unreasonable and discriminatory, as the Scheme did not contemplate such restriction. Thus, there was an express stipulation in the Removal of Difficulties Order that an application under the Samadhan scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .12.2014. (ii)Shri Sajid Khan, LDC: Shri Sajid Khan was on unauthorized absent from 02.05.2011. CIU, NCH, found it very difficult to trace out his whereabouts and correspondences made by CIU, NCH, on his number of addresses were received back undelivered. Therefore, under Rule 19 (ii) of the CCS (CCA) Rules, 1965, Shri Sajid Khan, LDC (TA) was dismissed from the Government service, vide Order dated 29.02.2016. (iii) Shri Jitendra R. Padte, Sepoy:- Charge Memorandum dated 29.11.2016 for major penalty was issued to Shri Jitendra R. Padte. The Inquiry Officer was appointed to inquire into the case. The IO found the charges as Not Proved . Subsequently, the Disciplinary Authority, vide Order dated 20.02.2020, dropped all the charges levelled against Shri Jitendra R. Padte in the said Charge Memorandum dated 29.11.2016 and exonerated him from the case. 3. This is for kind information and necessary action at your end. 4. This issues with the approval of the Pr. Commissioner of Customs (Gen.), NCH, Mumbai Zone-I. 46.The Civil Miscellaneous Appeals filed by the individual appellants are disposed in terms of this order. No costs. Connected miscellaneous petitions are closed. - - TaxTMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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