TMI Blog2009 (2) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... own as M/s Akai Impex Ltd.) under Section 28 alongwith appropriate interest under Section 28AB of the Customs Act, 1962 (in short the 'Act'). The benefit of exemption in terms of Notification No.117/94-Cus. Dated 27.4.1997 was denied and liability of the goods to confiscation under Section 111(d) and (o) of the Act was upheld. But since the goods were not available, confiscation was not ordered. Penalty equal to duty amount on the importer under Section 114A of the Act was imposed and Rs.50 lakhs was imposed on Shri Mahendra Shah and Rs.25 lakhs each on four other appellants before the CESTAT. 2. Case of the department that the Special Import License (in short 'SIL') purchased by the importer from brokers for clearance of gold and silver was forged and, therefore, was not valid for the consignments in question. 3. Background facts as emerging from the Commissioner's order are that the office premises of one M/s. Gazebo and M/s. Mahavir Corporation, were searched by officers of DRI and copy of SIL No.3536539 dated 6.8.1997 issued to M/s. Track Industries, Kanpur, was recovered. The Joint Director General of Foreign Trade, Kanpur informed that no such licence had been issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e period of limitation is not to be reckoned from the date of discovery of the forgery. Accordingly, the demands including the penalty imposed were cancelled. 6. In support of the appeal, learned counsel for the appellant submitted that since the SIL involved was established to be forged there was no question of denying the extended period of limitation. 7. Learned counsel for the respondents on the other hand submitted that the department has not established that the buyer had knowledge about the forgery. The mens rea being one of the ingredients to avail extended period of limitation the CESTAT was justified in its conclusions. 8. As noted above, the CESTAT has not gone into the question whether the SIL involved was genuine or not. It was of the view that the department has not established that buyer had knowledge that there was any forgery involved. 9. "fraud" means an intention to deceive; whether it is from any expectation of advantage to the party himself or from the ill will towards the other is immaterial. The expression "fraud" involves two elements, deceit and injury to the person deceived. Injury is something other than economic loss, that is, deprivation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is a concept descriptive of human conduct. Michael Levi likens a fraudster to Milton's sorcerer, Comus, who exulted in his ability to, 'wing me into the easy hearted man and trap him into snares'. It has been defined as an act of trickery or deceit. In Webster's Third New International Dictionary "fraud" in equity has been defined as an act or omission to act or concealment by which one person obtains an advantage against conscience over another or which equity or public policy forbids as being prejudicial to another. In Black's Legal Dictionary, "fraud" is defined as an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or surrender a legal right; a false representation of a matter of fact whether by words or by conduct, by false or misleading allegations, or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury. In Concise 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 L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The misrepresentation must be in relation to the conditions provided in a section on existence or non-existence of which the power can be exercised. But non-disclosure of a fact not required by a statute to be disclosed may not amount to fraud. Even in commercial transactions non-disclosure of every fact does not vitiate the agreement. "In a contract every person must look for himself and ensures that he acquires the information necessary to avoid bad bargain. In public law the duty is not to deceive. (See Shrisht Dhawan (Smt.) v. M/s. Shaw Brothers, (1992 (1) SCC 534). 13. In that case it was observed as follows: "Fraud and collusion vitiate even the most solemn proceedings in any civilized system of jurisprudence. It is a concept descriptive of human conduct. Michael levi likens a fraudster to Milton's sorcerer, Comus, who exulted in his ability to, 'wing me into the easy-hearted man and trap him into snares'. It has been defined as an act of trickery or deceit. In Webster's Third New International Dictionary fraud in equity has been defined as an act or omission to act or concealment by which one person obtains an advantage against conscience over another or whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ither by words or letter. Although negligence is not fraud but it can be evidence on fraud; as observed in Ram Preeti Yadav's case (supra). 17. In Lazarus Estate Ltd. v. Beasley (1956) 1 QB 702, Lord Denning observed at pages 712 713, "No judgment of a Court, no order of a Minister can be allowed to stand if it has been obtained by fraud. Fraud unravels everything." In the same judgment Lord Parker LJ observed that fraud vitiates all transactions known to the law of however high a degree of solemnity. (page 722) 18. These aspects were highlighted in the State of Andhra Pradesh and Anr. v. T. Suryachandr Rao (2005 (5) SCALE 621) and Bhaurao Dagdu Paralkar v. State of Maharashtra and Ors. (2005 (7) SCC 605) 19. It was for the buyer to establish that he had no knowledge about the genuineness or otherwise of the SIL in question. 20. The maxim caveat emptor is clearly applicable to a case of this nature. As per Advanced Law Lexicon by P. Ramanatha Aiyar, 3 rd Edn. 2005 at page 721: Caveat emptor means "Let the purchaser beware." It is one of the settled maxims, applying to a purchaser who is bound by actual as well as constructive know ..... X X X X Extracts X X X X X X X X Extracts X X X X
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