TMI Blog2013 (5) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... dence gathered by Revenue against the appellants was sufficient opportunity granted for rebuttal. Revenue discharged its onus of proof and burden of proof remained un-discharged by appellants. They failed to lead their evidence to rule out their role in the offence committed and prove their case with clean hands. No evidence gathered by Revenue were demolished by appellants by any means. Crystal clear factual findings of the learned Adjudicating Authority and echoing evidence on record do not demonstrate that adjudications were made suspiciously or under surmise. All pleadings of the appellants were ill-founded. Show Cause Notice properly brought them to charge exhibiting civil and evil consequences for opportunity of rebuttal. Nothing was dealt behind their back. Investigation story was backed by evidence and not impeachable. In view of the above findings, we hold that the importer appellants are liable to pay the duty and interest adjudged against the imports made by them covered by the adjudications under appeal and the traders, brokers and sub-brokers of fake TRAs and DEPB scrips are liable to be penalised being instrumental in providing such instruments. We uphold the Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder-in-Original No. 6933/07 dt. 26-11-2007 passed by the CCE (Adjudication), Chennai S. No. Appeal No. Appellant Status Duty Penalty 4. C/19/08 Neemichand Jain v. CC (Sea-Export) Chennai Licence Dealer/ Broker NIL 3,50,000/- 5. C/73/08 Sashi Prakash Lohia (Pankaj Impex) v. CC (Sea-Export) Chennai Broker/ Trader NIL 12,00,000/- 6. C/86/08 Sri Devi Extractions Pvt. Ltd. v. CC (Sea-Export) Chennai Importer 23,39,565/- 6,00,000/- 7. C/182/08 Satish Mohan Agarwal v. CC (Sea-Export) Chennai Broker NIL 12,00,000/- Arising out of Order-in-Original No. 5659/06 dt. 21-12-2006 passed by the Commissioner of Customs (Export), Chennai S. No. Appeal No. Appellant Status Duty Penalty 8. C/65/07 Sohan Lal, (Prop. Jaimaya Enterprises) v. CC (Sea-Export) Chennai Broker/ Trader in Licence NIL 1,00,000/- 9. C/66/07 P. Suresh Kumar (Raksha Exports) v. CC (Sea-Export) Chennai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- 22. C/52/08 Delphi-TVS Diesel Systems Ltd. v. CC (Sea-Export) Chennai Importer 25,79,845/- 6,00,000/- 23. C/181/08 Satish Mohan Agarwal v. CC (Sea-Export) Chennai Broker NIL 12,50,000/- Arising out of Order-in-Original No. 6930/07 dt. 26-11-2007 passed by the CCE (Adjudication), Chennai S. No. Appeal No. Appellant Status Duty Penalty 24. C/70/08 Sashi Prakash Lohia v. CC (Sea-Export) Chennai Trader in licence NIL 15,00,000/- 25. C/17/08 Neemichand Jain v. CC (Sea-Export) Chennai Broker/ Dealer in licence NIL 3,00,000/- 26. C/85/08 M.K. Oil Corporation v. CC (Sea-Export) Chennai Importer 29,83,127/- 7,50,000/- 27. C/179/08 Satish Mohan Agarwal v. CC (Sea-Export) Chennai Broker NIL 15,00,000/- Arising out of Order-in-Original No. 6931/07 dt. 26-11-2007 passed by the CCE (Adjudication), Chennai S. No. Appeal No. Appellant Status Duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rising out of Order-in-Original No. 6949/07 dt. 30-11-2007 passed by the CCE (Adjudication), Chennai S. No. Appeal No. Appellant Status Duty Penalty 42. C/20/08 Neemichand Jain v. CC (Sea-Export) Chennai Broker NIL 60,000/- 43. C/80/08 Sashi Prakash Lohia (Pankaj Impex) v. CC (Sea-Export) Chennai Broker/ Trader in licence NIL 65,000/- 44. C/208/08 Pradeep Kabra (Time Enterprises) v. CC (Sea-Export) Chennai Trader in EXIM scrips NIL 60,000/- Arising out of Order-in-Original No. 6947/07 dt. 30-11-2007 passed by the CCE (Adjudication), Chennai S. No. Appeal No. Appellant Status Duty Penalty 45. C/16/08 Neemichand Jain v. CC (Sea-Export) Chennai Dealer/ Broker of Licence NIL 3,50,000/- 46. C/78/08 Sashi Prakash Lohia (Prop. Pankaj Impex) v. CC (Sea-Export) Chennai Trader in DEPB Licence NIL 5,00,000/- 47. C/187/08 Satish Mohan Agarwal (Prop. Casino Electronics) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 70,000/- 60. C/186/08 Satish Mohan Agarwal v. CC (Sea-Export) Chennai Broker/ Trader in DEPB licence NIL 75,000/- Arising out of Order-in-Original No. 7453/08, dt. 25-3-2008 passed by the CCE (Adjudication), Chennai S. No. Appeal No. Appellant Status Duty Penalty 61. C/153/08 Mukesh Balar v. CC (Sea-Export) Chennai Broker/ Dealer of Licence NIL 10,00,000/- 62. C/154/08 Suresh Kumar (Raksha Exports) v. CC (Sea-Export) Chennai Broker NIL 10,00,000/- 63. C/170/08 S.P. Lohia v. CC (Sea-Export) Chennai Broker/ Commission Agent NIL 10,00,000/- Arising out of Order-in-Original No. 6945/07, dt. 30-11-2007 passed by the CCE (Adjudication), Chennai S. No. Appeal No. Appellant Status Duty Penalty 64. C/76/08 S.P. Lohia (Prop. Pankaj Impex) v. CC (Sea-Export) Chennai Broker/ Trader in DEPB Licence NIL 1,50,000/- 65. C/185/08 Satish Mohan Agarwal (Prop. M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of the Notification issued by the Department of Revenue. In this scheme, the importers are given the facility to discharge duty liability through debits against DEPB scrips under Notification No. 34/97-Cus., dated 7-4-1997 and 45/2002-Cus., dated 22-4-2002. In addition, importer can avail the benefit of Nil rate of Special Additional Duty (SAD) under Notification No. 23/02-Cus., dated 1-3-2002 against the utilization of DEPB licence under Notification No. 34/97-Cus., dated 7-4-1997. 4. Background of the cases 4.1 Investigation into the impugned TRAs used at the Chennai Port for clearance of different imports covered by different adjudications under appeal in this batch of appeals revealed that these imports were made against false, fake, forged and fabricated TRAs indicating DEPB scrips which were not at all transferred by owners thereof to the importer appellants as stated by the owners thereof and traders, brokers and sub-brokers appellants herein were engaged in illicit trading and dealing of such instruments and supplied the same to importer appellants in these appeals showing that the DEPB scrips mentioned in the TRAs were registered at the Jawaharlal Nehru Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were sold by him to various importers and brokers in Chennai. Shri Satish Agarwal was trading in DEPB licensees from New Delhi in the name of M/s. Casino Electronic Private Ltd. and was raising debit note in the name of different companies with their addresses for trading in the DEPB scrips viz. 1) M/s. K.K. Trading, Pradhan Building, 1st Floor, Room No. 19, Tank Bunder Road, Mazgaon, Mumbai, 2) M/s. Evergreen Enterprises, BMC Building, No. 5, 1st Floor, Room No. 26/27, S.S. Road, Mumbai, 3) M/s. Jayant H. Sanghvi, No. 127, C BIT Block, Lakshminayarayan Lane, Matunga Mumbai, 4) M/s. Universal Enterprises No. 80-C/22, Sector 10, Kopar Khairani, Navi Mumbai. 5.3 According to terms of deal, Shri Satish Agarwal was sending the DEPB scrips under TRAs and other documents in sealed cover by courier and collecting the sale proceeds of the DEPB licensees as per the debit note given to him. Sri Lohia also stated that he used his brother-in-law s company viz. PI Trading Corporation for trading in the DEPB scrips. Payment against the DEPB scrips and TRAs purchased were made by him in the above mode. 5.4 Evidence gathered by investigation and verified in Customs port at Mumbai revealed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants acted bona fide and utilised the same for discharge of duty. (6) When the DEPB scrips were not forged but were good scrips issued, the appellants are not liable to any consequence under the law. (7) The sub-brokers and brokers not having made huge profit except earning 0.5% profit on the deal, imposition of heavy penalties on them is unwarranted and uncalled for. (8) That Govt. should provide safeguard measures against forgery of DEPB scrips/TRAs. (9) Statements used against appellants were exculpatory and shall not implicate appellants. (10) The newly introduced Section 28AAA of Customs Act, 1962 not being retrospective, the buyer importers are not liable to pay duty and interest. 7. Arguments on behalf of revenue Learned DR appearing for Revenue supported the adjudication order submitting that Sri Sashi Prakash Lohia and Sri Satish Mohan Agarwal masterminded the trading with the forged and fabricated TRAs indicating DEPB scrip details therein to defraud Revenue for which the adjudication orders do not require any interference and the appellants do not deserve any leniency. 8. Fraud in the eyes of law 8.1 It is a fraud in law if a party make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hankar 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. 9. Findings and conclusion by Tribunal Heard both sides and perused records. The principal issue involved in the batch of appeals is whether the importer appellants were entitled to the benefit of fake, forged and fabricated DEPB scrips/TRAs and whether the traders, brokers and sub-brokers supplying such instruments were liable to penal consequence of law under Customs Act, 1962. So also whether Settlement Commission s order passed in case of some importers who are not in appeal before Tribunal shall bind Tribunal to grant immunity to traders, brokers and sub-brokers of fake, false, forged and fabricated DEPB scrips/TRAs. 10. Importers liability 10.1 Evidence gathered by Revenue unambiguously and succinctly proved that the TRAs used by the importer appellants were fake, false, forged and fabricated for discharge of customs duty and caused prejudice to Revenue. Similarly, the traders, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentations, 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 fake TRAs, the importer Appellants were not innocent. Claim at the threshold was based on fake TRAs. Therefore, Revenue has rightly invoked extended period under Section 28 of the Customs Act, 1962 to adjudicate the matter. 10.5 It has been held in ICI India Limited v. CC (Port), Calcutta - 2005 (184) E.L.T. 339 (Cal.) that the DEPB licence/scrip is admittedly a negotiable one and is available in the market. Anyone can purchase it from the market and avail of the credit out of it. But, ultimately if it is found that the said DEPB scrips were not acquired lawfully nor transferred by original owners thereof credit cannot be derived from forged TRA. The decision of Hon ble Calcutta High Court was affirmed by Apex Court in appeal by ICI India Ltd. as reported in 2005 (187) E.L.T. A31 (S.C.). Thus invoking of extended period for adjudication was justified and importer appellants were liable to consequence under Customs law. 10.6 Following decision of Hon ble High Court of Punjab Haryana in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss a convenient lever to retain the illegal gains indefinitely. We have no hesitation to say that a person, who s case is based on falsehood, has no right to approach the court. He can be summarily thrown out at any stage of the litigation. Thus plea of these appellants are baseless and being misconceived are devoid of merit and they are liable to penalty under law for the unlawful act. The order of the Tribunal in the case of S.K. Colombowala v. CC (Import), Mumbai - 2007 (220) E.L.T. 492 (Tri.-Mum.) does not come to rescue of these appellants since that decision did not take into consideration the law laid down by Apex Court in the case of Chengalvaraya Naidu (supra). Accordingly, the orders passed by Settlement Commission in case of importers are not binding on Tribunal to grant relief to the appellants who were not before the Settlement Commission and fraud and Justice being sworn enemy of each other, the appellants in aforesaid appeals are barred to take undue advantage of orders of Settlement Commission since they were not before the Commission. Further, the doctrine of finality does not immune these appellants who defrauded Revenue. 12. Liability of fake DEPB/TRA traders, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee of probability that a prudent man ought to act on the supposition that there was abetment to the offence of use of fake, false, forged and fabricated DEPB scrips and TRAs to clear imports duty free in contravention of the law. Thus, without detaching themselves from the deal of aforesaid ill-designed deal to defraud Revenue entire conduit is liable to consequences under law. 13. Adjudications were not time-barred 13.1 It is cardinal principle of law which is enshrined in Section 17 of Limitation Act that fraud nullifies everything. The adjudications were not time-barred following Apex Court judgment in the case of CC. v. Candid Enterprises - 2001 (130) E.L.T. 404 (S.C.). Nothing demonstrated that the Authority below merely acted on imagination while the adjudication was based on cogent evidence. All the adjudications were done following due process of law on the basis of evidence establishing loss of revenue caused by the appellants supplying and using the false, forged and fabricated TRAs covering the DEPB scrips not acquired legitimately for use in clearance of imports at Chennai port. Such instruments were non est in the eyes of law at all times and were void. The importe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue. 13.4 We also find that while upholding the decision of the Tribunal in the case of R.S. Trade Link v. CC, New Delhi - 2010 (255) E.L.T. 572 (Tri.-Del.), the Hon ble High Court of Delhi has held in the case of Rahuljee Company Ltd. v. CC, New Delhi - 2011 (267) E.L.T. 313 (Del.) as follows :- 15. We do not find any illegality in the reasoning recorded by the Tribunal in this regard which is as under :- 6.1.1. As regards the duty liability, since there is no dispute about the fact that the advance licence against which duty fee imports of copper/brass scrap have been made by these importers, are forged and had never been issued by DGFT, in view of - (a) Hon ble Madras High Court s judgment in case of East West Exporters v. AC, Customs reported in 1993 (68) E.L.T. 319 (Mad.) (b) Hon ble Calcutta High Court s judgment in case of ICI India Limited v. CC, Calcutta reported in 2005 (184) E.L.T. 339 (Cal.), the SLP to Hon ble Supreme Court against which has been dismissed vide order reported in 2005 (187) E.L.T. A31(S.C.), and (c) Judgment of Hon ble Punjab Haryana High Court in case of CC, Amritsar v. ATM International reported in 2008 (222) E.L.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t done that, consequences have to follow. These aspects do not appear to have been considered by the CESTAT in coming to the abrupt conclusion that even if one or all the respondents had knowledge that the SIL was forged or fake that was not sufficient to hold that there was no omission of commission on his part so as to render silver or gold liable for confiscation. 28. As noted above, SILs were not genuine documents and were forged. Since fraud was involved, in the eye of law such documents had no existence. Since the documents have been established to be forged or fake, obviously fraud was involved and that was sufficient to extend the period of limitation. 16. In view of the above discussion, we do not find any infirmity or perversity in the findings of the learned Tribunal. Consequently, the question as framed is answered in the affirmative in favour of the Department and against the appellants. 14. Conclusion 14.1 Enactments like Customs Act, 1962, and Customs Tariff Act, 1975, are not merely taxing statutes but are also potent instruments in the hands of the Government to safeguard interest of the economy. One of its measures is to prevent deceptive practices of un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proved. They had defrauded Revenue. Fruits of forbidden tree being always forbidden, the importer appellants had no right to make gain out of fake TRAs covering DEPB scrips obtained fraudulently. They are, therefore, liable to pay the duty lost in the imports make by them, along with interest thereon. 14.5 In view of the above findings, we hold that the importer appellants are liable to pay the duty and interest adjudged against the imports made by them covered by the adjudications under appeal and the traders, brokers and sub-brokers of fake TRAs and DEPB scrips are liable to be penalised being instrumental in providing such instruments. We uphold the Orders-in-Original. However, in the fitness of the circumstances of the cases and to meet the ends of justice - (1) Penalties are set aside against the importer-appellants while confirming the duty and interest demanded from them. (2) We uphold the penalties imposed on appellant Shri Satish Mohan Agarwal in view of his pivotal role in the entire fraud beginning from making the fake, forged, false, fabricated and fraudulent DEPB scrips/TRAs. (3) Penalties against the following abettor traders/brokers/sub-brokers in appeal are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sashi Prakash Lohia (Prop. Pankaj Impex) v. CC (Sea-Export) Chennai Trader in DEPB licence 12,50,000/- Arising out of Order-in-Original No. 6932/07 dt. 26-11-2007 passed by the CCE (Adjudication), Chennai S. No Appeal No. Appellant Status Reduced Penalty (Rs.) 11. C/72/08 Sashi Prakash Lohia (Prop. Pankaj Impex) v. CC (Sea-Export) Chennai Trader in DEPB licence 6,25,000/- 12. C/18/08 Neemichand Jain v. CC (Sea-Export) Chennai Broker/ Dealer in licence 1,50,000/- Arising out of Order-in-Original No. 6930/07 dt. 26-11-2007 passed by the CCE (Adjudication), Chennai S. No. Appeal No. Appellant Status Reduced Penalty (Rs.) 13. C/70/08 Sashi Prakash Lohia v. CC (Sea-Export) Chennai Trader in licence 7,50,000/- 14. C/17/08 Neemichand Jain v. CC (Sea-Export) Chennai Broker/ Dealer in licence 1,50,000/- Arising out of Order-in-Original No. 6931/07 dt. 26-11-2007 passed by the CCE (Adjudication), Chennai S. No. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S. No. Appeal No. Appellant Status Reduced Penalty (Rs.) 27. C/16/08 Neemichand Jain v. CC (Sea-Export) Chennai Dealer/ Broker of Licence 1,75,000/- 28. C/78/08 Sashi Prakash Lohia (Prop. Pankaj Impex) v. CC (Sea-Export) Chennai Trader in DEPB Licence 2,50,000/- Arising out of Order-in-Original No. 6944/07 dt. 30-11-2007 passed by the CCE (Adjudication), Chennai S. No. Appeal No. Appellant Status Reduced Penalty (Rs.) 29. C/409/07 Suresh (Raksha Exports) v. CC (Sea-Export) Chennai Broker 35,000/- 30. C/410/07 Ashok Kumar (Anmol Exports/Ashok Impex) v. CC (Sea-Export) Chennai Trader/ Broker 35,000/- 31. C/75/08 S.P. Lohia (Prop. Pankaj Impex) v. CC (Sea-Export) Chennai Trader/ Broker 37,500/- Arising out of Order-in-Original No. 6948/07 dt. 30-11-2007 passed by the CCE (Adjudication), Chennai S. No. Appeal No. Appellant Status Reduced Penalty (Rs.) 32. C/396 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Licence 6,00,000/- 44. C/21/08 Neemichand Jain (Rajendra Enterprises) v. CC (Sea-Export) Chennai Broker/ Dealer in Licence 2,50,000/- 15. Before parting with these cases, we may state that interest of justice demands the negligent officers involved in the aforesaid cause against the State need also be proceeded against with sternly so that it may serve as a lesson to others. A democratic Government does not mean a lax Government. The rules or procedure and/or principles of natural justice are not meant to enable the guilty to defeat objects of Customs Act, 1962. The wheels of Justice may appear to grind slowly but is the duty of all of us to ensure that they do grind steadily and grind well and truly. The justice system cannot be allowed to become soft, supine and spineless. Hence, we order a full investigation of these cases by the office of the DG (Vigilance), CBEC so that appropriate disciplinary action is taken against officials of the Custom House DRI due to whose involvement or negligence such frauds could be perpetuated. 16. All the 67 appeals are dismissed except for setting aside and reducing penalties in some of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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