2024 (8) TMI 799 - AT - Customs

DEPB license duty exemption restored after customs fails to prove forgery allegations through proper investigation

CESTAT Ahmedabad set aside the Commissioner's order denying duty exemption under Notification No. 34/97-Cus for imports made using allegedly forged DEPB ... Forged DEPB licenses and Release Advises - whether DEPB licenses based on which TRAs issued by Bombay Customs House, against which appellant imported goods at Kandla port availing duty exemption under Notification No. 34/97-Cus. dated 07.04.1997 as amended, are forged and hence void-ab-initio as held by the Commissioner? HELD THAT:- It is noticed that based on letter dated 25.08.2001 of Commissioner of Customs, Jawahar Custom House, Sheva, a show cause notice was issued by the Deputy Commissioner, Kandla which was then by corrigendum dated 30.09.2002 was made answerable to Commissioner of Customs, Custom House, Kandla. Upon perusal of the said letter dated 25.08.2001 of the Commissioner of Customs, Sheva it is noticed that the same doubts the authenticity of the licenses shown in the register of the custom house. It states that the investigation with reference to the above mentioned DEPBs and TRAs have been taken up by Air Cargo Complex, Mumbai and Bombay Custom House and in the meanwhile to safeguard revenue interest immediate action to identify clearance and to demand duty may be taken. It follows from the record that absolutely no investigation was carried out thereafter to establish the alleged forged nature of the said DEPB licenses. Clearly, show cause notice issued solely based on said letter dated 25.08.2001 lacks its very foundation. It is observed that learned Commissioner acting as adjudicating authority, carried out inquiry with the DGFT office after more than 10 years of the issuance of show cause notice and relied upon the said letter to conclude that the DEPB licenses are forged. Upon perusal of the said letter dated 6.11.2012, it does not categorically state the Licenses in question are forged, further it does not rule out possibility of issuance of same series of numbers to licenses of DEPB category by the issuing authority - Reliance is placed upon the case of COMMISSIONER OF CENTRAL EXCISE, DELHI-III VERSUS CARRIER AIRCON LTD. [2005 (5) TMI 69 - SUPREME COURT] in which it has been held that it is not permissible for the Commissioner in review to introduce new material and travel beyond record of original proceedings. Since the alleged forged nature of DEPB licenses is not proved beyond doubt, impugned order denying exemption granted to the appellants is liable to be set aside. Consequently, duty confirmed, and penalty imposed by the impugned order are also liable to be set aside. The impugned orders are set aside - Appeals are allowed. Issues:Appeal against duty demand and penalty imposition based on alleged forged DEPB licenses and Release Advises.Detailed Analysis:Issue 1: Alleged Forgery of DEPB Licenses and Duty ExemptionThe appeals were filed against the duty demand and penalties imposed on importers availing exemption under Notification No. 34/97 against DEPB licenses. The investigation revealed that licenses purchased were allegedly forged, leading to duty exemption fraud. The Commissioner issued a show cause notice invoking extended period under the Customs Act, 1962, demanding customs duty and penalties. The original order confirmed duty demand and penalties, prompting appeals. The Tribunal remanded the case due to non-supply of relied-upon documents. The subsequent adjudication confirmed the forged nature of licenses based on a letter from the Deputy Director General of Foreign Trade. The appellant challenged this decision.Issue 2: Arguments and SubmissionsThe appellant's counsel argued lack of evidence establishing forgery, questioned the authenticity of the documents relied upon, and highlighted the absence of conclusive investigations. The department's representative reiterated the findings supporting the original order.Issue 3: Tribunal's Analysis and DecisionThe Tribunal critically assessed the evidence and proceedings. It noted that the show cause notice's foundation, the letter doubting license authenticity, lacked specific details and investigation follow-up. The absence of inquiries or verification before the notice weakened the case. The reliance on a letter from the DGFT after a significant time lapse was deemed inappropriate. The Tribunal emphasized the need for specific allegations in show cause notices, citing relevant legal precedents. As the alleged forgery remained unproven, the duty demand and penalties were set aside, ruling in favor of the appellant.In conclusion, the Tribunal allowed the appeals, overturning the duty demand and penalties. The judgment highlighted procedural flaws, lack of conclusive evidence, and improper reliance on belated information. The decision underscored the importance of specific allegations in show cause notices and adherence to procedural fairness in customs adjudications.