TMI Blog2007 (8) TMI 712X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to imposition of penalty is allowed by Remand. - Appeal No. CDM-32/2005 - Final Order No. A-1433/Kol./2007 - Dated:- 3-8-2007 - Chittaranjan Satapathy D.N. PANDA , JJ. For The Appellant : A.K. Banerjee For The Respondent : P.K. Das JUDGMENT : Being aggrieved by Order dated 22.12.2004, passed by Ld. Commissioner of Customs (Port) with the following consequences, the appellant M/s. Kamala Metachem came in appeal before this forum in Appeal Case No. CDM-32/2005. (a) Duty of ₹ 52,06,361/- was demanded in respect of the consignments imported on the basis of forged and fake DEPB Nos. 02602431, 02602425, 02602393 of dt. 01.02.99 and DEPB Nos. 02601998, 02601999 both dated 04.01.1999. (b) Interest on the duty amount was payable. (c) Goods valued at CIF ₹ 1,16,04,027.35 was held liable for confiscation under Section 111 (o) of Customs Act, 1962 (herein after referred to as the Act ). However, those goods not being available for confiscation, Redemption Fine not imposed. (d) Penalty of ₹ 15,00,000.00 was imposed under Section 112 (A) of Customs Act, 1962. 2.1 Along with Appeal, the Appellant had also filed stay application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng overdraft facilities from the bank, but the appellant could not make payment to the bank due to shortage of funds. The bank is consistently pressurizing the appellant to reduce quantum of overdraft. (g) The appellant has been facing extreme difficulties to meet statutory liabilities. 3.2 On merit, the learned Counsel challenged the impugned order praying for setting aside of the same with consequential relief on the ground that the order passed by the Ld. Adjudicating Authority was not proper and not maintainable. Proceeding was time barred under Section 28 of the Act. He principally argued that the appellant purchased the DEPB under bona fide belief that those were genuine and it was not at all actively or consciously involved in the alleged fraud committed by the brokers/sellers of DEPB for which the appellant was not at all liable to be imputed to charges nor liable to any duty or penalty. It was also submitted by him that merely because CBI enquiry was made, the authorities should not have acted suspiciously and taken adverse view against the appellant. When the Customs Authorities allowed import without payment of duty on the basis of the DEPB purchased from market, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edly issued in favour of M/s. Hindalco Industries Ltd. and while obtaining/purchasing the said DEPB, dealt with non-existent broker firms instead of purchasing from and making payments directly to the DEPB scrip holder. The total DEPB credit availed of by them in clearing the said consignments amounted to ₹ 52,06,361/-. Duty liability on imported consignments was sought to be discharged by availing of DEPB credit under the forged and fabricated documents. 6.2 Investigation by Revenue revealed that DEPB Nos. 02602431 dt. 1.2.99, 02602425 dt. 1.2.99 and 02602393 dt. 01.2.99 were not at all issued in favour of M/s. Ispat Alloys Ltd. Similarly, the other two DEPB viz. 02601998 and 02601999 both dated 04.01.99 were not issued at all in favour of M/s. Hindalco Industries Ltd. The transfer letter, the letterhead and the bank account No. shown in the purported transfer letters of M/s. Ispat Alloys Ltd. were all forged and bogus. The fact was similar in respect of the purported purchase from M/s. Hindalco Industries Ltd. 6.3 In a statement recorded under Section 108 of the Customs Act, 1962, Shri Manash Kr. Paul, partner of M/s. Kamala Metachem, stated that the impugned DEPB wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spat Alloys Limited and M/s. Hindalco Industries Ltd. denied that they had ever owned, possessed or transferred the questioned DEPB to the Appellant from whom the Appellant had claimed to have purchased. Enquiry revealed that the broker firms i.e. M/s. National Engineering Works, M/s. Imtex Corporation and M/s. Parag International who issued debit notes in favour of the Appellant had been found to be fictitious/non-existing. 6.5 Investigation into the aforesaid forgery and fake DEPB license was made by CBI. Copy of charge sheet filed by Appellant on 9.7.07 exhibited that Sri B.N. Jalan, N.K. Jalan as Licence Brokers had approached J.K. Chaudhary K.K. Chaudhary for arranging forged DEPB scrips, who in turn contacted Sambhu Guha (Ex employee of the office of Z. JDGFT, Kolkata). Sri Guha who arranged information of DEPB Files and the Shipping Bills of the stolen Files were utilized for deciding the DEPB No., Name of the Company, amount of DEPB and verification of the questioned forged DEPB. These DEPB were verified by Tapabrata Banerjee, Examiner by writing the DEPB number by filling up the Blank space, in the DEPB Noting Register in active collusion with P.K. Agarwal, Appraise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereof 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 penalties therefore, but still then one would be liable to pay the duty and interest and for other statutory consequences which one cannot avoid. 5. In the circumstances, we do not find that any question of law as contended by Dr. Pal is involved in the present case. This appeal is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot of forfeiture of property illegally acquired but on parity, a person committing fraud is required to restore the benefits taken and cannot be held to say that since the benefit was transferred to an innocent person and since an innocent person cannot be punished, such a person should also be exonerated. 11. Where the claim at the threshold was based on a forged document, in absence whereof credit would not have been availed, consequences of adjudication cannot be said to be a harsh punishment or disproportionate to the malfeasance committed. Pleas of no proper proceeding against Appellant was made, is devoid of merit when the investigation revealed fraud involved in the transaction made by Appellant. There was lack of bona fide when the Appellant did not bother to ascertain genuineness of DEPB from DGFT or M/s. Ispat Alloys Ltd. and M/s. Hindalco Industries Ltd. The Appellant preferred to prejudice itself if detected. Adjudication made on the basis of enquiry by Customs Authority and subsequent investigation by CBI also went against Appellant making it liable to charge. Because import was allowed pending investigation, the Appellant is not immune from consequences of law when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay duty even though the transferee who was imported the impugned goods may not have a role in obtaining the D.E.P.B.s. by forging shipping documents and bank remittance papers in view of the Apex Court decisions in:- (i) Nova Pan India Ltd. Vs. CCE, Hyderabad - 1994 (73) ELT 769 (S.C.) = 1994 (54) ECR 505 (S.C.), and (ii) Rajasthan Spinning and Weaving Mill Vs. CCE - 1995 (77) ELT 474 (S.C.) = 1995 (58) ECR 569 (S.C.),'' ** ** ** In para 15, the Tribunal further held that: 15. Before parting with the case, we note that though no exports have been made and no foreign exchange has been received, yet D.E.P.B.s have been issued to fictitious and non-existent firms on prior export basis and subsequently, these D.E.P.B.s have been utilized for importing large quantity of imported goods duty free without any verification of the export documents or bank remittance details by either the D.G.F.T. officials or the Customs officials. We also note that some of the transfer documents have been signed by Bank officials purporting to verify the signature of the transferers. However, we find to our utter surprise that the Show Cause No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Kamala Others 2001 (4) SCC 342, since the transferee Appellant has not derived any legal right out of the forged document for the reason that fraud nullifies everything as pronounced by the Hon'ble Supreme Court in the matter of Commissioner of Customs Vs. Candid Enterprises reported in 2001 (44) RLT 702 (SC)=2001 (130) ELT 404 (SC). 15. In view of the foregoing, we are of the considered view that the duty demand determined and confirmed against the appellant in respect of the consignments cleared under cover of forged and fake DEPB is in order and we uphold the same. However, as regards the penalty, we find that the Adjudicating Commissioner has not imposed any penalty on the appellants under Section 114 (a) of the Customs Act, 1962 but has imposed a penalty of ₹ 15.00 Lakhs under Section 112 (a) of the Customs Act, 1962. Considering the fact that the adjudicating Commissioner himself has recorded that the investigation against the Jalan Brothers have not been concluded and since the CBI Investigation Report is subject matter of prosecution case filed by the CBI, the decision on penalty proceedings against the appellants is pre-mature before the investigations ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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