2013 (5) TMI 383 - AT - Customs

Tribunal decisions impact importers, fraudsters, and officials, highlighting vigilance and penalties.

The Tribunal dismissed 67 appeals, except for setting aside and reducing penalties in some cases. It affirmed duty and interest demands against importers, ... Alleged use of false and fabricated Telegraphic Release Advice (TRA) by importers to clear their goods imported duty free using no rightful acquisition of DEPB scrips and such instruments traded by traders, brokers and sub-brokers to make that available to importer appellants causing detriment to the interest of Revenue or to defraud revenue - for which they faced different consequences of law by the impugned orders – Imposition of duty/interest/penalties. Held that - 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 undue claim of fiscal incentives. Evidence Act not being applicable to quasi judicial proceeding, preponderance of probability came to rescue of Revenue and Revenue was not required to prove its case by mathematical precision. Exposing entire modus operandi through allegations made in the show cause notice on the basis of evidence 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 Orders-in-Original. 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. All the 67 appeals are dismissed except for setting aside and reducing penalties in some of the cases as indicated above. Issues Involved:1. Use of false and fabricated Telegraphic Release Advice (TRA) by importers.2. Legitimacy of DEPB scrips and their acquisition.3. Liability of traders, brokers, and sub-brokers in the fraudulent use of DEPB scrips.4. Applicability of penalties and duty recovery.5. Impact of Settlement Commission's orders on non-parties.6. Timeliness of adjudications under the Customs Act, 1962.Detailed Analysis:1. Use of False and Fabricated TRA:The investigation revealed that importers used false, fake, forged, and fabricated TRAs to clear goods duty-free, causing revenue loss. The TRAs indicated DEPB scrips not transferred by the original owners, and no genuine TRAs were issued by Mumbai Customs to Chennai Customs.2. Legitimacy of DEPB Scrips and Their Acquisition:The DEPB scheme aimed to neutralize customs duty on import content of export products. However, the investigation found that the DEPB scrips used were not legitimately acquired from the original exporters. Importers failed to verify the genuineness of the scrips, leading to fraudulent use.3. Liability of Traders, Brokers, and Sub-brokers:Traders, brokers, and sub-brokers were found to be instrumental in trading fake, false, forged, and fabricated TRAs. Key individuals like Sashi Prakash Lohia and Satish Mohan Agarwal played pivotal roles in this fraudulent activity, supplying these instruments to importers.4. Applicability of Penalties and Duty Recovery:The Tribunal upheld the penalties and duty recovery against importers and intermediaries. It emphasized that fraud nullifies all transactions and that the appellants failed to establish bona fide acquisition of DEPB scrips. The extended period for duty recovery under Section 28 of the Customs Act, 1962, was justified due to the fraudulent nature of the transactions.5. Impact of Settlement Commission's Orders on Non-parties:The Tribunal held that orders of the Settlement Commission, which provided immunity to some importers, did not bind the Tribunal in granting relief to traders, brokers, and sub-brokers who were not before the Commission. Fraudulent actions cannot be shielded by the principle of finality of litigation.6. Timeliness of Adjudications:The adjudications were not time-barred as fraud nullifies all legal protections. The Tribunal cited various judgments to support the stance that fraud unravels all transactions and extends the limitation period for adjudication.Conclusion:The Tribunal dismissed all 67 appeals except for setting aside and reducing penalties in some cases. It emphasized the need for disciplinary action against negligent officials and ordered a full investigation by the DG (Vigilance), CBEC. The Tribunal affirmed the duty and interest demands against importers and upheld penalties against key fraudsters while reducing penalties for some intermediaries. The decision underscored the seriousness of fraud and the necessity of safeguarding public revenue.