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TMI Blog2025 (4) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... certain goods vide Bills of Entry by debiting the applicable Customs duty from a DEPB Licence/Scrip. The said DEPB Licence/Scrip originally issued in the name of the exporter M/s. Bilwa Labs, was transferred to the appellants. M/s. Bilwa Labs had allegedly attempted to export restricted item viz. 'Potassium Chloride' or 'Muriate of Potash' by mis-declaring the same as 'Industrial Salt' without possessing a valid licence. The Commissioner of Customs, Bangalore had passed an order holding that Bilwa Labs had exported 23,601 MT of Muriate of Potash during the period from October 2007 to May 2009 by mis-declaring the same as 'Industrial Salt' without possessing a valid licence in contravention of the provisions of Section 11 of the Customs Act, 1962 read with the provisions of Foreign Trade (Development & Regulation) Act, 1992; the Joint Director-General of Foreign Trade, Bangalore had also issued a notice alleging that the exporter M/s. Bilwa Labs had obtained the DEPB Licence/Scrip by mis-declaring their export products as 'Industrial Salt' instead of Muriate of Potash which was not eligible for benefit under DEPB scheme; the appellant had purchased part of the scrip for an unutiliz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n initiated by the department alleging that the duty payment made by the appellant by utilizing the credit available in the DEPB Licence/Scrip was not legal on the ground that the M/s. Bilwa Labs obtained the same by fraudulent means is totally unsustainable. It is stated that even the department does not allege that the appellants had indulged in some kind of fraud, all that is held against the appellants is that they had purchased a licence which had been obtained by the seller M/s. Bilwa Labs through fraudulent means. The duty paid by them using the credit available in the DEPB Licence/Scrip cannot be denied since the said licence was duly registered and displayed by the licensing authority i.e. DGFT as a valid one. Besides, the said licence was admittedly registered at ICD, Bangalore and the duty payment towards the imported goods was allowed by the Customs authorities out of the licence itself. At the time of clearance of the goods by the appellants, the DEPB Licence was clearly valid and in the absence of any allegation that the appellant had presented a forged or invalid licence, the duty paid by it utilizing the unutilized credit could not be faulted with. The DEPB Licence/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow Cause Notice issued on 2013 was time-barred and hence the demands are liable to be set aside on limitation. Reliance in this regard is placed on the decision of Hon'ble High Court of Punjab and Haryana in the case of Commissioner of Customs Versus Vallabh Design Products [2007 (219) E.L.T 73 (P&H)] wherein it was held that when the DEPB scrip was purchased from open market under bona fide belief of being genuine, the imported goods cannot be held liable to confiscation and extended period of limitation is not invokable in the absence of mis-representation, collusion or suppression of facts against the transferee. The above decision of the High Court was maintained by the Hon'ble Supreme Court as reported in 2016 (341) E.L.T A 222 (S.C)] 18. Reliance is also placed Hon'ble High Court of Gujarat rendered in the case of Indian Acrylics Ltd Versus Commissioner of Customs, Kandla [2015 (325) E.L.T 753 (Tri-Ahmd)] wherein when it was found that the DEPB scrip was found to be genuine at the time of import then such document is valid it is set aside and, in the circumstances, extended period of limitation is not invokable. The said decision of the CESTAT was affirmed by the High Court o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the goods imported by them were based on the fraudulently obtained DEPB scrips, the question of imposing penalty on them does not arise. Accordingly, we set aside the penalty. 8. Appeals are partly allowed by confirming the duty demand along with the interest and setting aside the penalty under Section 114A of the Customs Act, 1962." 4.1. The Revenue further submits that the present appeals arose from similar set of facts as in the case of ITC Filtrona case referred to above. In Friends Trading Co. [2010 (254) ELT 652 (P&H)], the appellants imported goods against DEPB scrips. Later, it was found that DEPB scrips were obtained by producing forged bank certificate of export and realisation. The DEPB scrips were cancelled by the competent authority. Accordingly, demand of duty was confirmed after issuance of show-cause notice. The Commissioner of Customs held that any concession availed of on the basis of DEPB Scrips obtained by producing forged documents could not be retained. This view was affirmed by the Tribunal. The Punjab and Haryana High Court affirmed the order of the Tribunal holding that there was no ground to interfere with the order upholding demand of duty on goods i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same position as his predecessor. If the extended period of limitation could be invoked against the original holder of fraudulent or forged DEPB, the same could be invoked against successor or purchaser. The judgments relied upon on behalf of the petitioner are distinguishable. The matter is covered by view taken by this Court earlier which has been followed by the Tribunal. Thus, we are unable to hold that any substantial question of law arises." 4.2. It is further stated that an appeal filed against the order of the High Court was dismissed by the Hon'ble Supreme Court in Munjal Showa Ltd. vs. Commissioner of Cus. & Ex, Delhi [2022 (382) ELT 145 (S.C)]. The Hon'ble Supreme Court held observed as: "8. From the judgment and order passed by the Tribunal and even from the findings recorded by the Department, it has been found that the DEPB licenses/Scrips, on which the exemption benefit was availed of by the appellant(s) (as buyers of the forged/ fake DEPB licenses/Scrips) were found to be forged one and it was found that the DEPB licenses/Scrips were not issued at all. A fraud was played and the exemption benefit was availed on such forged/fake DEPB licenses/Scrips. 9. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... means dishonest dealing, deceit or cheating etc. It makes no difference whether fraud is committed by outrightly forging of documents or by willful misdeclaration/misrepresentation. A fraud is a fraud and there are no categories of mild frauds and severe frauds in taxation matters. Further in a recent case of Tata Iron & Steel Co. Ltd. v. C.C., Mumbai [2015 (319) E.L.T. 546 (S.C.)] on the issue of applicability of extended period in such cases it has been held by Apex Court as follows : "[Order] - The only question in the present appeals is as to whether the customs authorities could invoke the provisions of proviso to Section 28 of the Customs Act, 1962, to avail the benefit of extended period of limitation. 2. In the facts of the present case we find that the original licence holder, namely, Indian Card, Clothings Company Limited had deliberately suppressed the fact of having availed Modvat credit under Rule 57A of the Central Excise Rules, 1944, and made willfully wrong declaration to the licensing authority to obtain the endorsement of transferability of the same while transferring the licenses to the appellant herein. In view thereof, the extended period of limitation woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant), who claimed benefit on the basis of forged DEPB Scripps stood at par with his predecessor and, therefore, cannot get the benefit of forged documents. The order passed by the Commissioner of Customs was the subject matter of appeal before the Tribunal. The Tribunal rejected the plea of the appellant on the issue of liability of duty but remanded the matter to the original authority on the issue of penalty. It is reported that the issue with respect to penalty, on remand, is yet pending. However, the Tribunal confirmed the duty liability. 2.3 Feeling aggrieved and dissatisfied with the order passed by the Tribunal, the appellant preferred appeal before the High Court under Section 130 of the Customs Act. Before the High Court, it was mainly contended on behalf of the appellant that the show-cause notice issued was beyond the period of limitation and in the facts and circumstances of the case and when the ingredients of "fraud" and "with intent to evade payment of duty" are absent, the extended period of limitation could not have been invoked by the Department. 2.4 By the impugned judgment and order, the High Court has dismissed the said appeal confirming the order pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Duty of which the exemption benefit was availed against such DEPB licenses/Scrips. It is submitted that as rightly observed by the High Court as well as by the Tribunal that fraud vitiates everything and therefore, such forged/fake DEPB licenses/Scrips are void ab initio. It is submitted that therefore, no error has been committed in confirming the Customs Duty. 7. We have heard the Learned Counsel appearing on behalf of the respective parties at length. 8. From the judgment and order passed by the Tribunal and even from the findings recorded by the Department, it has been found that the DEPB licenses/Scrips, on which the exemption benefit was availed of by the appellant(s) (as buyers of the forged/ fake DEPB licenses/Scrips) were found to be forged one and it was found that the DEPB licenses/Scrips were not issued at all. A fraud was played and the exemption benefit was availed on such forged/fake DEPB licenses/Scripps. 9. In that view of the matter and on the principle that fraud vitiates everything and such forged/fake DEPB licenses/Scrips are void ab initio, it cannot be said that the Department acted illegally in invoking the extended period of limitation. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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