TMI Blog2016 (2) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... of duty confirmed - though penalty waived - Decided against the appellant. - Appeal No. C/85/2007 - FINAL ORDER No.41473/2015 - Dated:- 11-6-2015 - R. Periasami, Member (T) And P. K. Choudhary, Member (J) For the Appellant : Mr Karthik Sundaram, Adv For the Respondent : Ms Indira Sisupal, AC (AR) ORDER Per R Periasami The appellant filed appeal against Commissioner's order dt. 30.11.2006. The present appeal is in fourth of round of litigation before this Tribunal. 2.The brief facts of the case are that appellants are manufacturers of caustic soda and imported Vinyl Chloride Monomer (VCM) in April 2004 under 3 Bills of Entry and cleared the same under 9 DEPB licences at NIL rate vide Notification No.45/2002-Cus. dt. 22.4.2002. The details of DEPB license numbers, licence holders amount, Bill of Entry wise etc. as tabulated in page-2 of the OIO (page 47 of paper book) is reproduced below as under:- S.No. TRA No. Date DEPB Licence No. Date Name of the Licence Holder Credit Amount of License (Rs.) Bill of Entry No. Date where credit used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso demanded customs duty. Commissioner of Customs, Tuticorin in his order-in-original No.26/2005 dt. 3.5.2005 confirmed the demand and imposed penalty on the appellant and also other co-noticees. The appellant had appealed before this Tribunal and vide Final Order No.1396/2005 dt. 28.9.2005 this Tribunal set aside the order and remanded to the adjudicating authority with a direction to give reasonable opportunity to the party for cross examination of the witnesses. 3. The adjudicating authority passed the de novo adjudication order dt. 30.11.2006 which is impugned in this appeal held that all the DEPB licences produced by the appellants for clearance of the goods are fake and confirmed the duty of ₹ 95,29,591/- under Section 28 (1) of the Customs Act along with interest and imposed penalty of ₹ 50,000/- on the appellant under Section 112(a). 4. On second round of appeal, this Tribunal set aside the order and the Tribunal vide Final Order No.270/2009 dt. 16.3.2009 allowed the appeal on the ground of limitation. The Tribunal held that appellant had no knowledge or reason to believe that the licences purchased from the broker were fake/forged. The Tribunal while all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re made aware of the forged licences vide Asst. Commissioner (SIIB) letter dt. 14.9.2004 (Ref.Page No.307 of the PB). Immediately on receipt of the letter dt. 14.9.04, they filed FIR against all the owners and brokers. The copy of FIR is available at pages 308 to 315 of the paper book. He further submits that they have taken all the precautions and initiated criminal proceedings.He further submits that they have been dealing with the broker M/s.R. Somanathan Co. since 2003 and regularly purchasing licences and clearing the goods by using the DEPB licences and therefore there was no doubt against the broker. The adjudicating authority in his de novo order again confirmed the Customs duty. 5.1 He relied Tribunal's order dt.28.9.2005 wherein the Tribunal has categorically directed to allow cross-examination of the persons by the appellant. He submits that they specifically requested for cross-examination. He refers to para 4.02 and 4.03 of the order wherein the adjudicating authority expressed his inability and the appellants had agreed to waive cross-examination and to hear the case on merits. 5.2 Appellant also relied on Tribunal's final order dt. 16.3.2009 wherein t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Hon'ble Madras High Court decision in the case of CC (Imports) Chennai Vs Flemingo (DFS) Pvt. Ltd. He also submits that Hon'ble Supreme Court's decision in Aafloat Textiles (India) Pvt. Ltd. (supra) is distinguishable as the apex court has not discussed as to how forgery has to be proved in a criminal case. He submits that above Supreme Court judgement is per incurium and applicable only to that case whereas the Supreme Court judgement in the case of CC (Imports), Bombay Vs Hico Enterprises (supra) is applicable to the present case. 5.5 He submits that cross examination of witnesses was not waived by appellant and it is still maintained as stated in the written submissions dt. 6.10.2006 submitted during remand proceedings. 6. On the other hand, Ld. AR reiterated the impugned order. She submits that all the licences are forged. She particularly refers to Licence No.0610006778/5/06/00 dt. 27.1.2004 which showed Seema Exports whereas the said licence was remitted in the Lex Boots. She further submits that appellants were owners of original licences. She refers to transferror's laws as at pages 142, 144, 145. She submits that these TRAs were delivered at Paras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Judge Bench judgement of Supreme Court will prevail over. 8. We have carefully considered the submissions of both sides and records. The present appeal before Tribunal is in fourth round of litigation arising out of same de novo adjudication order dt. 30.11.2006. The issue before us is whether clearance of imported goods duty-free by utilizing fake/forged DEPB licences is in order and whether the demand of Customs duty forgone is correct or otherwise and the penalty is imposable or not. The period of import relates to April 2004 and we find in the impugned order the Commissioner of Customs, Tuticorin has dealt the issue in detail in respect of each licence and the modus operandi of forgery of the said DEPB licences and also forgery of TRAs masterminded by the licence brokers. The impugned de novo order dt. 30.11.2006 was passed only against the present appellant M/s.DCW Ltd. whereas we find in the original order No.26/2005 dt. 3.5.2005 the adjudicating authority confirmed the demand against appellant and also imposed penalties on the appellants and several other co-noticees who involved in the forgery of licences. Whereas we find that only the appellant filed appeal and the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On perusal of the statement of B.R. Chandran, we find that he categorically deposed that he already knew that the said DEPB licences which were to be arranged by Mr. Sankaran through Mr. Mohd. Korsi were fake and forged at the time of obtaining the licence. He also deposed that this fact was already known to V.Sankaran of M/s.R.Somanathan Co. before purchase of the said licences. 12. On perusal of the Licence No.0610006778/5/06/00 dt. 27.1.2004, we find that original DFRC licence was issued to M/s.Seema Exports, Kanpur whereas the licence produced at the time of clearance at Tuticorin Customs, the licence was shown post-export DEPB licence issued to M/s.Lex Boots which clearly shows that by using the other licence number created fake, forged licence showing fake signature of DGFT authorities and also created fake TRAs. Appellant mainly contended that even in the licence is forged / fake customs cannot deny DEPB licence as they were the user of licence procured in the market through broker and in this regard, they have relied Tribunal's Larger Bench decision in the case of Hico Enterprises (supra) which was affirmed by the Hon'ble Supreme Court. The Tribunal's Lar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act with knowledge that it was false. In leading English case i.e. Derry and Ors. v. Peek (1886-90) All ER 1 what constitutes fraud was described thus: (All ER p. 22 B-C) fraud 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 . But fraud in public law is not the same as fraud in private law. Nor can the ingredients, which establish fraud in commercial transaction, be of assistance in determining fraud in Administrative Law. It has been aptly observed by Lord Bridge in Khawaja v. Secretary of State for Home Deptt. (1983) 1 All ER 765, that it is dangerous to introduce maxims of common law as to effect of fraud while determining fraud in relation of statutory law. Fraud in relation to statute must be a colourable transaction to evade the provisions of a statute. If a statute has been passed for some one particular purpose, a court of law will not countenance any attempt which may be made to extend the operation of the Act to something else which is quite foreign to its object and beyond its scope. Present day concept of fraud on statute has ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Oxford Dictionary, it has been defined as criminal deception, use of false representation to gain unjust advantage; dishonest artifice or trick. According to Halsbury's Laws of England, a representation is deemed to have been false, and therefore a misrepresentation, if it was at the material date false in substance and in fact. Section 17 of the Contract Act defines fraud as act committed by a party to a contract with intent to deceive another. From dictionary meaning or even otherwise fraud arises out of deliberate active role of representator about a fact which he knows to be untrue yet he succeeds in misleading the representee by making him believe it to be true. The representation to become fraudulent must be of the fact with knowledge that it was false. In a leading English case Derry v. Peek [(1886-90) ALL ER Rep 1: (1889) 14 AC 337 (HL)] what constitutes fraud was described thus: (All Er p. 22 B-C) Fraud 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'. 14. This aspect of the matter has been considered by this Court in Ros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Arthur L. Corbin Ed. 3d. Am. ed.1919) Applying the maxim, it was held that it is the bounden duty of the purchaser to make all such necessary enquiries and to ascertain all the facts relating to the property to be purchased prior to committing in any manner. 23. Caveat emptor, qui ignorare non debuit quod jus alienum emit . A maxim meaning Let a purchaser beware; who ought not to be ignorant that he is purchasing the rights of another. Hob. 99; Broom; Co., Litl. 102 a: 3 Taunt, 439. 24. As the maximapplies, with certain specific restrictions, not only to the quality of, but also to the title to, land which is sold, the purchaser is generally bound to view the land and to enquire after and inspect the title-deeds; at his peril if he does not. 25. Upon a sale of goods the general rule with regard to their nature or quality is caveat emptor , so that in the absence of fraud, the buyer has no remedy against the seller for any defect in the goods not covered by some condition or warranty, expressed or implied. It is beyond all doubt that, by the general rules of law there is no warranty of quality arising from the bare contract of sale of goods, and that where there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraph, the broker himself was aware of the forged licences and deliberately procured the said licence knowingly fully aware that these were all forged/fake that shows that appellants have failed to cause any enquiry and take requisite precautions before procuring these fake/forged licences obtained in a fraudulent manner from the broker. Appellants filing F.I.R after the fraud was detected by the Department is of no consequence and it is only an afterthought to save their lapses. Therefore the apex court's decision in Aafloat Textiles case is clearly applicable to the present case and the appellant's contention that above Supreme Court judgement is per incurium is not acceptable. 13. Further, we find that Hon'ble Supreme Court in a recent decision in the case of TISCO Vs CC Mumbai (supra) on identical issue of fraud committed by the original licence holder, the Apex Court upheld the Tribunal's order confirming the demand on TISCO who is the transferee of such licence. The relevant paragraphs of the said judgement are reproduced as under: 2.In the facts of the present case, we find that the original licence holder, namely, Indian Card, Clothings Company ..... X X X X Extracts X X X X X X X X Extracts X X X X
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