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TMI Blog2025 (2) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ported by them were based on the fraudulently obtained DEPB scrips, the question of imposing penalty on them does not arise.'
Penalty - HELD THAT:- The demand of duty along with interest is upheld and for the reasons that at the time of import, the appellant was not aware of the fraudulently obtained DEPB licenses, the question of imposing penalty does not arise, hence penalty set aside.
Appeal allowed in part. X X X X Extracts X X X X X X X X Extracts X X X X ..... t by the revenue under Section 129D (2) of the Customs Act, 1962, hence the show-cause notice invoking suppression cannot be sustained. 4. The Authorized Representative on behalf of the Revenue submitted that since the DEPB licenses were obtained fraudulently even though they were valid at the time of import the fraudulent nature of the licenses remains and any imports made on such fraudulently obtained licenses cannot be held to be valid. Therefore, the Commissioner has rightly demanded duty along with the interest and imposed penalty on the appellants. 5. Heard both sides. 6. The questions to be decided is whether: a. the appellants who imported/cleared goods without payment of duty by using DEPB scrips which were later found to be obtained by fraudulent means are liable to duty; b. the demand is time barred; and c. the appellants are liable to penalty under Section 114A of the Customs Act, 1962. 7. It is an admitted fact that the DEPB licenses used by the appellants were obtained fraudulently by M/s. Bilwa Labs by mis-declaring Potassium Chloride (Muriate of Potash) as Industrial Salt. In similar set of facts this Tribunal vide Final Order No.20966-20967/2024 dated 08. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) observed that : "9. Appellants who imported the goods against transferable DFIA Licenses have also taken an argument that they have purchased the DFIA Licenses under a bona fide belief that the same were genuine. It is thus their case that they cannot be held as party to the fraud and extended period cannot be made applicable for demanding duty. Transferee appellants have relied upon an order dated 31-8-2015 passed by the co-ordination bench, Mumbai in the case of Incos ABS (India) Ltd. & Others v. C.C., Kandla. In this order it has been held by CESTAT, Mumbai that transferees cannot be held responsible for duty and that extended period is not applicable while demanding duty. With due respect we differ with the view expressed orders passed by CESTAT, Mumbai as several case laws, including some recently decided by the Apex Court, were not brought to the notice of CESTAT, Mumbai. On this issue Delhi CESTAT in the case of C.C., Amritsar v. Sona Castings [2010 (259) E.L.T. 693 (Tri.-Del.)] held that fraud vitiates everything and transferee is also responsible to pay duty against such scripts obtained fraudulently. This conclusion drawn is based on several quoted case law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forged DEPB scrips. But in the decision in United India Insurance (supra), the forgery related to the driving licence of the driver engaged by the insured, but the Insurance Policy was not found to be forged. The question would be different if the document itself, on the strength whereof credit is claimed is forged. In that event, the same cannot be equated with merely an irregularity in the licence of the driver driving the vehicle in relation to the liability of the insurer in relation to a valid insurance policy under the Motor Vehicles Act providing for compulsory insurance to secure third party interest. In this case, the document itself having been found to be forged whether there was collusion or fraud on the part of the appellant in the issue of the DEPB licences/scrips becomes absolutely immaterial and irrelevant since no credit can be derived from a forged DEPB. The credit is made available on the strength of a valid DEPB. If the DEPB is forged, then the same is non est and therefore, there is no valid DEPB. As such no credit can be derived thereunder. In such circumstances, one may defend his case that one may not be liable for collusion or fraud and exposed to other pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act or the rules made or notifications issued thereunder, by a person other than the person to whom the instrument was issued, the duty relatable to such utilization of instrument shall be deemed never to have been exempted or debited and such duty shall be recovered from the person to whom the said instrument was issued. Provided that the action relating to recovery of duty under this section against the person to whom the instrument was issued shall be without prejudice to an action against the importer under Section 28." 10.1 It is the argument of Learned Advocate that duty if any can only be demanded from the person in whose name DFIA Licenses were obtained fraudulently. It is observed that Section 28AAA of the Customs Act, 1962 has been made effective from 28-5-2012 and cannot be made applicable to the present proceedings for the periods prior to 28-5-2012. This provision has been made to give the department a tool also to recover Customs duty even from a person other than the importer of the goods. It is also observed that proviso to Section 28AAA(1) does not absolve the actual importer from payment of duty. Further Hon'ble Apex Court in the case of Tata Iron & Steel Co. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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