TaxTMI 
TaxTMI 
2010 (10) TMI 736
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....toms Act, 1962 against DEPB Scrip Nos. 3010006832 dated 14-11-2000. It was alleged by the Revenue that the DEPB scrips procured/purchased by the Appellant had been obtained fraudulently by M/s. JAS Knitwears, Noor Wali Road, Ludhiana making fraudulent representation/mis-statement. The said DEPB Scrip was suspended by the Director General of Foreign Trade, Ludhiana with immediate effect. Consequently, DEPB credit of Rs. 5,28,530/- obtained by the appellant on the basis of forged/substituted Shipping Bills were void ab initio for which exemption under Notification No. 34/1997-Cus., dated 7-4-1997 was not available on the imports covered by aforementioned Bill of Entry being ab-initio void. Special Additional duty of Customs to the extent of Rs. 1,10,769/- discharged by the appellant using the DEPB scrips, adjudication proceeding was initiated against the appellant to deny the benefit claimed as above and order-in-original no. 08/JC/CFS/LDH/05, dated 4-10-2005 was passed confirming the duty demand of Rs. 6,39,299/- with interest against the appellant. 3. Being aggrieved, the appellant went in appeal before the learned Commissioner (Appeals). That Authority held that it was prove....
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....roved by Hon'ble Supreme Court as reported in CC v. Leader Valves Ltd. - 2008 (227) E.L.T. A29 (S.C.). (7) When the DEPB scrips were not forged but were good scrips issued on the basis of fabricated documents, the appellant is not liable to consequence under the law following the judgment in the case of M/s. East West Exporters v. Assistant Collector of Customs [1993 (68) E.L.T. 319 (Mad.)]. (8) The Department failed to distinguish between a fraudulent Licence and a License, validly issued but on the basis of fabricated or fraudulent documents since in the first case licence may be merely voidable and valid until invalidated. Therefore the appellant cannot be denied DEPB benefits following Apex Court judgment in East India Commercial Co. Ltd. v. The Collector of Customs, AIR 1962 SC 1893 = 1983 (13) E.L.T. 1342 (S.C.). 5. Per contra Revenue's pleadings were : (1) adjudication was done following due process of law on the basis of evidence establishing loss of revenue caused by the appellant using DEPB scrips obtained fraudulently by the transferor thereof. (2). When the transferor had no title over the fraudulent DEPB scrips and those were non est in the eyes of law at all tim....
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....unal in the case of Kamala Metachem v. CC - 2007-TIOL-2247-CESTAT-KOL and in the case of M/s. Synotex Industries v. CC - 2008-TIOL-777-CESTAT-KOL. (11). When the material evidence established fraud against Revenue white collar crimes committed under absolute secrecy shall not be exonerated from penal consequence of law following Apex Court judgment in the case of K.I. Pavunny v. AC, Cochin - 1997 (90) E.L.T. 241 (S.C.). (12). It is cardinal principle of law which is enshrined in Section 17 of Limitation Act that fraud nullifies every thing, the adjudication was not time barred following Apex Court judgment in the case of CC. v. Candid Enterprise - 2001 (130) E.L.T. 404 (S.C.). (13). Nothing demonstrates that the Authority below merely acted on imagination while the adjudication was based on cogent evidence. 6. Heard both sides and perused records and gone through the citations made by them. 7. The principal issue involved in this case is whether the transferee appellant is entitled to the benefit of DEPB scrips fraudulently obtained by the transferor thereof. 8. Evidence gathered by Revenue unambiguously proved that the DEPB scrips used by the appellant for discha....
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....glish case i.e. Derry and Ors. v. Peek (1886-90) All ER 1 what constitutes "fraud" was described thus : (All ER p. 22 B-C) "fraud" is proved when it is shown that a false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false". This aspect of the matter has been considered by Apex Court in Roshan Deen v. Preeti Lal [2002 (1) SCC 100] Ram Preeti Yadav v. U.P. Board of High School and Intermediate Education [2003 (8) SCC 311], Ram Chandra Singh's case (supra) and Ashok Leyland Ltd. v. State of T.N. and Another [2004 (3) SCC 1]. Suppression of a material document would also amount to a fraud on the court, (see Gowrishankar v. Joshi Amha Shankar Family Trust, [1996 (3) SCC 310] and S.P. Chengalvaraya Naidu's case AIR-1994 SC-853. No judgment of a Court can be allowed to stand. If it has been obtained by fraud. Fraud unravels everything and fraud vitiates all transactions known to the law of however high a degree of solemnity. 12. When the Assessee acquired DEPB scrips from market without being an original acquirer, as an abundant caution, to avoid evil consequence of fraudulently obtained scrips, ....
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....iastical or temporal", noticed by the Supreme Court in S.P. Chengalvaraya Naidu v. Jagannath, AIR 1994 SC 853, are apt for the instant case. The Apex Court has also observed that an act of deliberate deception with the design of securing something by taking unfair advantage of another is a "fraud". "Fraud" is a cheating intended to get an advantage. A person whose case is based on falsehood has no right to seek relief in equity. In Commissioner of Customs v. Essar Oil Ltd., (2004) 11 SCC 364 = 2004 (172) E.L.T. 433 (S.C.), their Lordships of the Supreme Court have observed that it is a fraud in law if a party makes representations, which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad. Being the ultimate beneficiaries of the DEPBs, the appellant was not innocent. Claim at the threshold was based on non est DEPB scrips. Therefore Revenue has rightly invoked extended period under Section 28 of the Customs Act, 1962 to adjudicate the matter. The citations made by Revenue come to their rescue. 14. It has been held in ICI India Limited v. C.C (Port), Calcutta - 2005 (184) E.L.T. 339 (Cal.) the DEP....
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....1-9-2007 in CUSAP No. 27 of 2008 M/s. Munjal Showa Limited v. Commissioner of Customs and Central Excise (Delhi (IV), Faridabad) [2009 (246) E.L.T. 18 (P & H)]. After considering the observations of the Hon'ble Supreme Court in East India Commercial Company Limited v. Collector - 1983 (13) E.L.T. 1342 (S.C.) = AIR 1962 SC 1893, Collector of Customs, Bombay v. Sneha Sales Corporation - 2000 (121) E.L.T. 577, Sampat Raj Dugar - 1992 (58) E.L.T. 163 and Aban Loyd Chiles Offshore Ltd. and Others v. Commissioner of Customs, Maharashtra - 2006 (200) E.L.T. 370 (S.C.) = (2006) 6 SCC 482, by the Bombay High Court in Taparia Overseas (P) Limited v. UOI - 2003 (161) E.L.T. 47 and K. Uttamlal (Exports) Pvt. Limited v. UOI - 1990 (46) E.L.T. 527 and by the Allahabad High Court in Coolade Beverages Limited v. Commissioner of Central Excise, Meerut - 2004 (172) E.L.T. 451 and H. Guru Investment (North India) Pvt. Limited v. CEGAT, New Delhi, 1998 (104) E.L.T. 8 and judgments of this Court in Commissioner of Customs, Amritsar v. Vallabh Design Products - 2007 (219) E.L.T. 73 and Commissioner of Customs v. Leader Valves Ltd. - 2007 (218) E.L.T. 349, it was held as under :- "12. We do not fin....