2020 (2) TMI 437 - CESTAT NEW DELHI

Liability of bonafide importers who purchased the duty script from the market and used to pay customs duty - Misuse of various Export Promotion Scheme - Fake export - duty credit licenses, such as, DEPB/ FPS/DFIA/ VKGUY etc - Legal import or not - forged/fake documents - purchase of forged TRA alongwith DEPBs issued based on forged/fake export documents - whether the appellants had validly imported the consignments duty free on the strength of the licenses involved in these appeals?

HELD THAT:- The bona fide of imports which were made under the various export promotion schemes under Chapter 3 and 4 of the Exim Policy has to be examined. The importers purchased these licenses, which were transferrable from the license brokers. After the purchase of license, the importers did not apply for the issue to Telegraphic Release Advice (TRA) from the port of Registration (POR) as was required to be obtained the TRAs from the brokers. Not only that, they also failed to ascertain the veracity of such TRAs from the Port of Registration. Thus, the due diligent that was required to be exhibited by the importer was not carried out.

The entire racket has been carefully planned and executed by Paresh Daftary, Prabir Ghosh and Jyoti Biswas. These three persons circumvented all the laws, be it Customs, Foreign Trade or Exim Policy. They attempted to hoodwink all the government agencies and committed a fraud, which could only be detected, subsequently, in the investigation by the DRI. The appellants have not asserted that the exports had not been effect for they only contend that they were not a party to the fraudulent activities. The Adjudicating Authority has taken great pains to evaluate the entire sequence of events.

In EAST INDIA COMMERCIAL CO. LTD., CALCUTTA VERSUS COLLECTOR OF CUSTOMS, CALCUTTA [1962 (5) TMI 23 - SUPREME COURT], the Supreme Court noticed that the goods were imported under a valid license and, therefore, it was not possible to hold that the goods imported were prohibited or restricted under Customs Act. This case pertained to Sea Customs Act, 1872, while the present case is under the Customs Act, 1962 - It is manifestedly clear that the case at hand is distinguishable since there was no issue of TRA and the involvement of transferee had not been brought on record in the investigation. Thus, this case would not help the appellants.

In TAPARIA OVERSEAS (P) LTD. VERSUS UNION OF INDIA [2003 (1) TMI 127 - BOMBAY HIGH COURT], the original license was obtained by the transferee fraudulently which were subsequently transferred to the transferee. It was held that since the goods had been imported under a valid license, the duty liability would not accrue on the transferee - As the issue of forged TRA was not the issue before the Court, the case would have no application.

In COMMISSIONER VERSUS LEADER VALVES LTD. [2008 (3) TMI 665 - SC ORDER], the issue was identical as the DEPB was issued by the DGFT on the basis of forged document, bank realization certificate. The appellant was not a party to the fraud and had purchased DEPB from open market under a bona fide belief that it was genuine. The appellant paid full prices and availed the benefit. Merely because at a later stage the DEPB has been found to be fabricated, the assessee could not have been deprived of the benefit.

The adjudicating authority, in the impugned order, has wrongly held that the appellants have utilized forged TRA, although the issue pertained to the utilization of FPS licenses. Thus, the appeals filed by the department are allowed and they are remanded to the adjudicating authority for a fresh decision after granting a hearing to the appellants.

Appeal allowed by way of remand.