2016 (2) TMI 538 - AT - Customs

Tribunal Upholds Customs Authority's Decision in DEPB Fraud Case

Satish Mohan Agarwal (Prop. M/s. Casino Electronics) Versus CC (Sea-Export) Chennai

Satish Mohan Agarwal (Prop. M/s. Casino Electronics) Versus CC (Sea-Export) Chennai - 2016 (336) E.L.T. 562 (Tri. - Chennai) Issues Involved:1. Whether the DEPB scrips/TRAs used to discharge import duty liability were fake, forged, and fabricated.2. Whether the appellant committed any act to defraud Revenue and incurred liability under Section 112(a) of the Customs Act, 1962.3. Whether the adjudication orders were time-barred.4. Whether the principles of natural justice were violated.5. Whether the Customs Authority had jurisdiction over the matter.6. Whether the appellant's arguments and defenses were valid.Detailed Analysis:1. Fake, Forged, and Fabricated DEPB Scrips/TRAs:The Tribunal found that the DEPB scrips and TRAs used for duty-free imports at the Chennai Port were indeed false, fake, forged, and fabricated. The investigation revealed that these TRAs were not issued by Mumbai Customs but were produced by Customs House Agents (CHA) in sealed cover to Chennai Customs. The DEPB scrips mentioned in the TRAs were either not transferred by the owners to the importers or differed from the scrips registered at the port of export, causing a huge loss to Revenue.2. Appellant's Act to Defraud Revenue:The Tribunal concluded that the appellant was actively, consciously, and deliberately involved in the fraudulent scheme. The evidence demonstrated that the appellant sold the fake TRAs to Sri Sashi Prakash Lohiya, who then sold them to different importers. The appellant's actions were found to be in violation of Section 112(a) of the Customs Act, 1962, as he was part of a racket that engineered fraud against Revenue.3. Time-Barred Adjudication Orders:The Tribunal held that the adjudications were not time-barred. It referenced Section 17 of the Limitation Act, which states that fraud nullifies everything, and thus, the plea of time bar was untenable. The Tribunal cited the Apex Court judgment in CC. v. Candid Enterprises, which supports the notion that fraud voids all judicial acts, and therefore, the adjudications were timely and valid.4. Principles of Natural Justice:The Tribunal rejected the appellant's claim of violation of natural justice. It noted that the appellant was granted opportunities to be heard and to rebut the allegations. The appellant had submitted a reply to the show cause notice, and his defenses were considered by the adjudicating authority. Therefore, the Tribunal found no merit in the appellant's claim of procedural unfairness.5. Jurisdiction of Customs Authority:The Tribunal affirmed that the Customs Authority had jurisdiction over the matter. It cited the Apex Court judgment in Sheshank Sea Foods Pvt. Ltd. v. Union of India, which held that the EXIM Policy or Handbook of Procedure does not take away the powers of the Customs Authorities. The Tribunal also referenced the judgment of the Hon'ble High Court of Madras in Commissioner of Customs v. Pattu Exports Pvt. Ltd., which supports the Customs Authority's jurisdiction in such cases.6. Appellant's Arguments and Defenses:The Tribunal systematically addressed and dismissed the appellant's defenses:- The appellant's claim of no infraction of law and no credible evidence was rejected based on substantial evidence proving his involvement in the fraud.- The argument that the main offender was Sajid Khan was dismissed, as the appellant was found to be the mastermind behind the fraudulent scheme.- The plea that the DGFT is the only authority to deal with DEPB scrips forgery was rejected, affirming the Customs Authority's jurisdiction.- The contention that no incriminating evidence was found during the search was dismissed, as circumstantial evidence and the appellant's actions were sufficient to establish his guilt.- The appellant's reliance on the judgment in Commissioner of Customs Vs. Sanjay Agarwal was found inapplicable, as the facts of the present case were different.Conclusion:The Tribunal concluded that the appellant was guilty of defrauding Revenue by trading in fake, forged, and fabricated TRAs and DEPB scrips. The adjudications were not time-barred, and the principles of natural justice were followed. The Customs Authority had jurisdiction, and the appellant's defenses were found to be without merit. Consequently, all appeals were dismissed, and the Tribunal emphasized the need for stern action against erring officials to safeguard the economy and uphold the law.