Tribunal Upholds Duty Denial, Confirms Demand, and Rejects Exemption Claim

The Tribunal upheld the denial of duty exemption, confirmed duty demand, and imposed interest under Section 28AB of the Customs Act on goods imported under a fraudulently created license. The goods were confiscated with an option for redemption on payment of a fine. The Tribunal rejected the argument that the goods should not be confiscated due to the lack of involvement in the fraud, stating that fraud nullifies all actions stemming from it. The appellants were held liable for duty payment and confiscation of goods imported under the fake license. The Tribunal also set aside the order for levying interest under Section 28AB as the provision was not applicable at the time of import.

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Issues:
1. Duty exemption under the DEEC scheme.
2. Confiscation of goods imported under a fraudulently created license.
3. Liability to pay fine in lieu of confiscation.
4. Levying interest on duty under Section 28AB of the Customs Act.

Analysis:
1. The appellants imported chemicals under the DEEC scheme using a license obtained from a broker. The original authority denied duty exemption, confirmed duty demand, and imposed interest under Section 28AB. The goods were confiscated with an option for redemption on payment of a fine. The first appellate authority upheld this decision. The Tribunal found the DEEC license to be fake, making the appellants liable to pay duty. The argument that the goods should not be confiscated as the appellants had no role in the fraud was rejected, citing that fraud nullifies everything done pursuant to it. Thus, the goods imported under a fraudulently created license were liable for confiscation.

2. The appellants contested the confiscation, arguing that since no bond was required at the time of clearance and the goods were already consumed, confiscation was not permissible. The Tribunal distinguished a previous case where confiscation was set aside due to misdeclaration of goods' value, stating that in this case, the goods were imported fraudulently. Referring to apex court rulings, the Tribunal held that goods imported under a fraudulently created license were subject to confiscation. The Tribunal reduced the fine amount from Rs. 15,000 to Rs. 10,000 based on the goods' value.

3. Regarding the levy of interest under Section 28AB, the Tribunal noted that this provision was not in force when the import occurred. The liability to pay interest is linked to the duty payment, and as the provision was not applicable at the time of clearance, the Tribunal set aside the order for levying interest. The judgment modified the impugned order accordingly, disposing of the appeal with the above decisions.

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