TMI Blog2010 (10) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... goods vide Bills of entry No. 483 dated 26-9-2000 and cleared the same using questionable DEPB scrips bearing No. 3010005329 dated 22-8-2000 for payment of Customs duty amounting to Rs. 26,973/-. Those scrips were found to be ab initio void having been obtained by the transferor on the basis of fraudulent document and transferred to the appellant assessee who used for import. 3. M/s. Beni Exports, 384, Kahera Mohalla, Jallandhar, the transferor of the DEPB Scrip bearing No. 3010005329 dated 22-8-2000 was found by Joint Director General Foreign Trade, Ludhiana to have obtained the same on the basis of forged Bank Realization Certificates (BRC's) and also on the strength of substituted documents i.e. shipping Bills and forged Bank Realization Certificates. The bank concerned certified that the bank realization certificates on the basis of which the above exporter had obtained DEPB scrips were not issued by that Bank. For such reason, the Joint Director General Foreign Trade, Ludhiana cancelled the DEBP scrips. 4. The DEPB scrips aforesaid being found to be ab initio void, the importer M/s. Sharman Woollen Mills Ltd., faced adjudication having used such questionable scrips against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, the respondents are not liable to consequence under the law following the judgment in the case of M/s. East West Exporters v. Assistant Collector of Customs [1993 (68) E.L.T. 319 (Mad.)]. (7) When the goods were not available for confiscation, order of confiscation was unwarranted and no redemption fine was imposable. So also penalty was not imposable following judgment of Hon ble High Court of Punjab Haryana in the case of CC v. Raja Impex Pvt. Ltd. - 2008 (229) E.L.T. 185 (P H) and Tribunal s decision in Chinku Exports v. CC - 1999 (112) E.L.T. 400 (Tri.) as affirmed by Apex Court in CC. v. Chinku Exports - 2005 (184) E.L.T. A36 (S.C.). 7. Learned DR appearing for Revenue pleaded : (1) That adjudication was done following due process of law on the basis of evidence establishing loss of revenue caused by the appellant using DEPB scrips obtained fraudulently by the transferor thereof. (2) When the transferor had no title over the fraudulent DEPB scrips and those were non-est in the eyes of law at all times and were void, the Assessee does not assume any title over the same. Accordingly the Assessee was bound to compensate Revenue for the losses due to use of scrips to disch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d fraud against Revenue white collar crimes committed under absolute secrecy shall not be exonerated from penal consequence of law following Apex Court judgment in the case of K.I. Pavunny v. AC, Cochin - 1997 (90) E.L.T. 241 (S.C.). (12) It is cardinal principle of law which is enshrined in Section 17 of Limitation Act that fraud nullifies every thing, the adjudication was not time barred following Apex Court judgment in the case of CC. v. Candid Enterprise - 2001 (130) 404 (S.C.). (13). Nothing demonstrates that the Authority below merely acted on imagination while the adjudication was based on cogent evidence. 6. Heard both sides and perused records and gone through the citations made by them. 7. The principal issue involved in this case is whether the transferee Appellant was entitled to the benefit of DEPB scrips fraudulently obtained by the transferor thereof and whether redemption fine and penalty was imposable on the appellant when goods were not available for confiscation. 8. Evidence gathered by Revenue unambiguously proved that the DEPB scrips used by the Assessee for discharge of customs duty were fraudulently obtained by the transferor and were transferred to it. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raud is proved when it is shown that a false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false . This aspect of the matter has been considered by Apex Court in Roshan Deen v. Preeti Lal [2002 (1) SCC 100], Ram Preeti Yadav v. U.P. Board of High School and Intermediate Education [2003 (8) SCC 311], Ram Chandra Singh s case (supra) and Ashok Leyland Ltd. v. State of T.N. and Another [2004 (3) SCC 1]. Suppression of a material document would also amount to a fraud on the court, (see Gowrishankar v. Joshi Amha Shankar Family Trust, [1996 (3) SCC 310] and S.P. Chengalvaraya Naidu s case AIR-1994 SC-853. No judgment of a Court can be allowed to stand if it has been obtained by fraud. Fraud unravels everything and fraud vitiates all transactions known to the law of however high a degree of solemnity. 12 When the Assessee acquires DEPB scrips from market without being an original acquirer, as an abundant caution, to avoid evil consequence of fraudulently obtained scrips, could have safeguarded its interest causing enquiry from JDGFT as to genuineness of the scrips. But that was not done. The Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase. The Apex Court has also observed that an act of deliberate deception with the design of securing something by taking unfair advantage of another is a fraud . Fraud is a cheating intended to get an advantage. A person whose case is based on falsehood has no right to seek relief in equity. In Commissioner of Customs v. Essar Oil Ltd., (2004) 11 SCC 364, their Lordships of the Supreme Court have observed that it is a fraud in law if a party makes representations, which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad. Being the ultimate beneficiaries of the DEPBs, the respondents were not innocent. Claim at the threshold was based on non est DEPB scrips. Therefore Revenue has rightly invoked extended period under section 28 of the Customs Act, 1962 to adjudicate the matter. The citations made by Revenue come to their rescue. 14. It has been held in ICI India Limited v. C.C (Port), Calcutta - 2005 (184) E.L.T. 339 (Cal.) the DEPB licence/scrip is admittedly a negotiable one and is available in the market. Any one can purchase it from the market and avail of the credit out of it. This was so do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. 18 (P H)]. After considering the observations of the Hon ble Supreme Court in East India Commercial Company Limited v. Collector - 1983 (13) E..L.T. 1342 (S.C.) = AIR 1962 SC 1893, Collector of Customs, Bombay v. Sneha Sales Corporation - 2000 (121) E.L.T. 577, Sampat Raj Dugar - 1992 (58) E.L.T. 163 and Aban Loyd Chiles Offshore Ltd. and others v. Commissioner of Customs, Maharashtra - 2006 (200) E.L.T, 370 (S.C.) = (2006) 6 SCC 482, by the Bombay High Court in Taparia Overseas (P) Limited v. UOI - 2003 (161) E..L.T. 47 and K. Uttamlal (Exports) Pvt. Limited v. UOI - 1990 (46) E.L.T. 527 and by the Allahabad High Court in Coolade Beverages Limited v. Commissioner of Central Excise, Meerut - 2004 (172) E.L.T. 451 and H. Guru Investment (North India) Pvt. Limited v. CEGAT, New Delhi, 1998 (104) E..L.T. 8 and judgments of this Court in Commissioner of Customs, Amritsar v. Vallabh Design Products - 2007 (219) E.L.T. 73 and Commissioner of Customs v. Leader Valves Ltd. - 2007 (218) E.L.T. 349, it was held as under :- 12. We do not find any applicability of the above judgment to the facts of the present case. In the present case, DEPB Scrip s were forged, which has been admitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of which also, exemption has been availed of, on the basis of DEPB scrips obtained against forged documents. We also find that the Hon ble High Court of Punjab Haryana have considered the decisions cited by the appellants in this case such as East India Commercial (supra), Sneha Sales Corporation (supra), Sampat Raj Dugar (supra), Taparia Overseas (supra) and others. Moreover, DEPB scheme essentially provides for an alternative mechanism to compensate for duty paid on goods used in the export production. When DEPB scrips have been obtained without undertaking exports, the question of granting a duty benefit by the exchequer cannot arise. Why should public revenue suffer on account of a fraud committed by someone else, just because he has successfully transferred the scrip to the appellants after obtaining the same fraudulently? 17. Accordingly, we hold that the appellant is not entitled to duty benefit under the DEPB scheme against fraudulently obtained DEPB scrips. Hence, we uphold the duty demand, demand of interest, confiscation of the impugned goods and imposition of redemption fine. However, in the circumstances of the case, the penalties are set aside. Accordingly, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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