TaxTMI 
TaxTMI 
2013 (5) TMI 383
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....tion 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 for which they faced different consequences of law by the impugned orders as mentioned against each hereunder :- Arising out of Order-in-Original No. 6934/07 dt. 26-11-2007 passed by the Commissioner of Central Excise (Adjudication), Chennai S. No. Appeal No. Appellant and Respondent Status Duty (Rs.) Penalty (Rs.) 1. C/63/08 K.I. International Ltd. (formerly Kothari Impex) v. CC (Sea-Export) Chennai Importer 45,33,549/- 12,00,000/- 2. C/74/08 Sashi Prakash Lohia (Pankaj Impex) v. CC (Sea-Export) Chennai Broker/ Trader in Licence/ TRA NIL 25,00,000/- 3. C/183/08 Satish Mohan Agarwal v. CC (Sea-Export) Chennai Broker in Licence/ TRA NIL 25,00,000/- Arising out of Order-in-Original No. 6933/07 dt. 26-11-2007 passed by the CCE (Adjudication), Chennai S. No. Appeal No. Appellant Status Duty Penalty 4. C/19/08 Neemichand Jain v. CC (Sea-Export) Chennai Licence Dealer/ Broker NIL 3,50,000/- 5. C....
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.... by the CCE (Adjudication), Chennai S. No Appeal No. Appellant Status Duty Penalty 20. C/72/08 Sashi Prakash Lohia (Prop. Pankaj Impex) v. CC (Sea-Export) Chennai Trader in DEPB licence NIL 12,50,000/- 21. C/18/08 Neemichand Jain v. CC (Sea-Export) Chennai Broker/ Dealer in licence NIL 3,00,000/- 22. C/52/08 Delphi-TVS Diesel Systems Ltd. v. CC (Sea-Export) Chennai Importer 25,79,845/- 6,00,000/- 23. C/181/08 Satish Mohan Agarwal v. CC (Sea-Export) Chennai Broker NIL 12,50,000/- Arising out of Order-in-Original No. 6930/07 dt. 26-11-2007 passed by the CCE (Adjudication), Chennai S. No. Appeal No. Appellant Status Duty Penalty 24. C/70/08 Sashi Prakash Lohia v. CC (Sea-Export) Chennai Trader in licence NIL 15,00,000/- 25. C/17/08 Neemichand Jain v. CC (Sea-Export) Chennai Broker/ Dealer in licence NIL 3,00,000/- 26. C/85/08 M.K. Oil Corporation v. CC (Sea-Export) Chennai Importer 29,83,127/- 7,50,000/- 27. C/179/08 Satish Mohan Agarwal v. CC (Sea-Export) Chennai Broker NIL 15,00,000/- Arisin....
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.... Broker NIL 60,000/- 43. C/80/08 Sashi Prakash Lohia (Pankaj Impex) v. CC (Sea-Export) Chennai Broker/ Trader in licence NIL 65,000/- 44. C/208/08 Pradeep Kabra (Time Enterprises) v. CC (Sea-Export) Chennai Trader in EXIM scrips NIL 60,000/- Arising out of Order-in-Original No. 6947/07 dt. 30-11-2007 passed by the CCE (Adjudication), Chennai S. No. Appeal No. Appellant Status Duty Penalty 45. C/16/08 Neemichand Jain v. CC (Sea-Export) Chennai Dealer/ Broker of Licence NIL 3,50,000/- 46. C/78/08 Sashi Prakash Lohia (Prop. Pankaj Impex) v. CC (Sea-Export) Chennai Trader in DEPB Licence NIL 5,00,000/- 47. C/187/08 Satish Mohan Agarwal (Prop. Casino Electronics) v. CC (Sea-Export) Chennai Broker/ Commission Agent NIL 5,00,000/- Arising out of Order-in-Original No. 6944/07 dt. 30-11-2007 passed by the CCE (Adjudication), Chennai S. No. Appeal No. Appellant Status Duty Penalty 48. C/409/07 Suresh (Raksha Exports) v. CC (Sea-Export) Chennai Broker NIL 70,000/- 49. C/410/07 Ashok Kumar (Anmol Exports/Ashok Impex) v. CC (Sea-Exp....
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....enalty 64. C/76/08 S.P. Lohia (Prop. Pankaj Impex) v. CC (Sea-Export) Chennai Broker/ Trader in DEPB Licence NIL 1,50,000/- 65. C/185/08 Satish Mohan Agarwal (Prop. M/s. Casino Electronics) v. CC (Sea-Export) Chennai Broker/ Trader NIL 1,50,000/- Arising out of Order-in-Original No. 7037/08, dt. 9-1-2008 passed by the CCE (Adjudication), Chennai S. No. Appeal No. Appellant Status Duty Penalty 66. C/81/08 Sashi Prakash Lohia (Pankaj Impex) v. CC (Sea-Export) Chennai Broker/ Trader in Licence NIL 12,00,000/- 67. C/21/08 Neemichand Jain (Rajendra Enterprises) v. CC (Sea-Export) Chennai Broker/ Dealer in Licence NIL 5,00,000/- 2. In view of the aforesaid common cause, all the appeals were heard analogous and disposed of by this common order with the consent of the parties. However, at the outset, it is desirable to briefly state the scheme of DEPB and TRA scheme, background of the case, modus operandi followed by parties, law of the land arresting fraud against Revenue and abetment for appreciation of the conclusion of Tribunal. 3. Duty Entitlement Pass Book (DEPB) and Telegraph....
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....same to importer appellants in these appeals showing that the DEPB scrips mentioned in the TRAs were registered at the Jawaharlal Nehru Customs House, Nhava Sheva, Mumbai. Those scrips were not at all actually transferred by registered owners thereof of that port of export. 4.2 It was also discovered by investigation that no TRAs were issued by Mumbai Customs to Chennai Custom House for use of the DEPB scrips mentioned therein for clearance of imports duty free at the Chennai port. The impugned TRAs produced by the importer appellants were found to be false, fake, forged and fabricated and were not at all genuine. That jeopardized interest of Revenue causing loss of duty. 4.3 In no uncertain terms investigation established that forged and fabricated TRAs were used by the importers purchasing the same from the open market from the traders, brokers and sub-brokers thereof. These intermediaries were instrumentality in the chain of deal causing loss to Revenue for which all of them became answerable through Show Cause Notices. They failed to contradict the evidence gathered by investigation except claiming innocence. 5. Conduits trading in fake, false, forged an....
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....ayment against the DEPB scrips and TRAs purchased were made by him in the above mode. 5.4 Evidence gathered by investigation and verified in Customs port at Mumbai revealed that all the DEPB scrips covered by TRAs were used in the impugned imports by appellent importers. Few such importers who are not in appeal went to Settlement Commission to settle their dispute which arose out of investigation resulting in use of false, fake, forged and fabricated TRAs without being issued by Mumbai Customs or without the DEPB scrips sold by real owners of such scrips in whose name the scrips were registered. The importers who did not go to the Settlement Commission came in appeal in some of the aforesaid appeals. S/Shri Sashi Prakash Lohia and Satish Mohan Agarwal were mastermind behind sale of the forged, fake and fabricated TRAs covering DEPB scrips to the tune of Rs. 4.75 crores and the sale proceeds thereof went to some fictitious companies. 5.5 Summons were issued under Section 108 of the Customs Act, 1962 to Shri Sashi Prakash Lohia on 28-3-05, 4-4-05, 15-4-05, 21-4-05 & 9-5-05 and to Shri Satish Mohan Agarwal on 2-12-04, 30-3-05, 25-4-05 & 27-5-05. But they did not respon....
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....i Sashi Prakash Lohia and Sri Satish Mohan Agarwal masterminded the trading with the forged and fabricated TRAs indicating DEPB scrip details therein to defraud Revenue for which the adjudication orders do not require any interference and the appellants do not deserve any leniency. 8. Fraud in the eyes of law 8.1 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. It is also well settled that misrepresentation itself amounts to fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by wilfully or recklessly causing him to believe and act on falsehood. Of course, innocent misrepresentation may give reason to claim relief against fraud. 8.2 An act of fraud on Revenue is always viewed seriously. "Fraud" and collusion vitiate even the most solemn proceedings in any civilized system of jurisprudence. It is a concept descriptive of human conduct either by letter or words, which includes the other person or authority to take a definite determinative stand as a response to the conduct....
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.... bind Tribunal to grant immunity to traders, brokers and sub-brokers of fake, false, forged and fabricated DEPB scrips/TRAs. 10. Importers liability 10.1 Evidence gathered by Revenue unambiguously and succinctly proved that the TRAs used by the importer appellants were fake, false, forged and fabricated for discharge of customs duty and caused prejudice to Revenue. Similarly, the traders, brokers and sub-brokers supplying such instruments were conduit and instrumentality in commitment of offence of causing loss to Revenue consciously and deliberately having intimate connection to each other. Neither the importer appellants nor the conduits could demolish the evidence gathered by Revenue making enquiry from DGFT Authority. Their ill-design was unearthed by investigation. 10.2 It is established principle of law that fraud and justice do not dwell together. An assessee acting in defiance of law has no right to claim innocence when he fails to exercise due care and diligence. Failing to cause enquiry with the issuing authority of DEPB scrips/TRAs crippled the importer appellants to claim bona fide. Findings of the learned Adjudicating Authority do not appear to ....
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.... transferred by original owners thereof credit cannot be derived from forged TRA. The decision of Hon'ble Calcutta High Court was affirmed by Apex Court in appeal by ICI India Ltd. as reported in 2005 (187) E.L.T. A31 (S.C.). Thus invoking of extended period for adjudication was justified and importer appellants were liable to consequence under Customs law. 10.6 Following decision of Hon'ble High Court of Punjab & Haryana in the case of Friends Trading Co. and Another v. Union of India - 2010 (254) E.L.T. 652 (P&H), it can be said that it is settled principle of common law that a purchaser does not acquire better title if such title was not acquired legitimately. Therefore, if there was no genuine sale of DEPB scrips by original owners thereof, the purchaser fails to acquire title over the same. This principle has also been recognized under Section 27 of the Sales of Goods Act, 1932. Judgment of the Hon'ble High Court of Punjab & Haryana was affirmed by Apex Court as reported in 2010 (258) E.L.T. A72 (S.C.). It has also been held by the Hon'ble High Court of Bombay in a batch of cases reported as CC, Mumbai v. M/s. Vaibhav Exports, Mumbai & Others - 2009-TIOL-673-HC-MUM-Cus....
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....s are not binding on Tribunal to grant relief to the appellants who were not before the Settlement Commission and fraud and Justice being sworn enemy of each other, the appellants in aforesaid appeals are barred to take undue advantage of orders of Settlement Commission since they were not before the Commission. Further, the doctrine of finality does not immune these appellants who defrauded Revenue. 12. Liability of fake DEPB/TRA traders, brokers and sub-brokers 12.1 Forged, fake, false and fabricated TRAs covering DEPB scrips/TRAs came into circulation as per story of Sri Sashi Prakash Lohiya as has been set out at the preceding paragraphs. The brokers and sub-brokers facilitated sale thereof to various importers to cause jeopardy to Revenue. If a person intimately attaches himself to certain acts and omissions questionable under law and also establishes his active involvement, his conscious knowledge to such act or omission is proved and when he is not a stranger to the questionable act or omission, he also fails to be exonerated from charges having failed to discard the evidence gathered by investigation against them. When the TRAs were sold at throw away price,....
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....uthority below merely acted on imagination while the adjudication was based on cogent evidence. All the adjudications were done following due process of law on the basis of evidence establishing loss of revenue caused by the appellants supplying and using the false, forged and fabricated TRAs covering the DEPB scrips not acquired legitimately for use in clearance of imports at Chennai port. Such instruments were non est in the eyes of law at all times and were void. The importer appellants did not acquire any title over the same. Accordingly, the importer appellants were bound to compensate Revenue for the losses they caused due to use of the fraudulently acquired scrips to discharge customs duty. Similarly, the traders, brokers and sub-brokers being conduit to make the questionabl instruments available to the appellants were equally liable in abetting the commitment of the offence of dealing with fake and false DEPB scrips and TRAs. 13.2 When fraud was established that has unravelled all. Revenue's stand is fortified from the Apex Court judgment in the case of UOI v. Jain Shudh Vanaspati Ltd. - 1996 (86) E.L.T. 460 (S.C.). So also fraud nullifies everything as held by Apex....
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.... Hon'ble Madras High Court's judgment in case of East West Exporters v. AC, Customs reported in 1993 (68) E.L.T. 319 (Mad.) (b) Hon'ble Calcutta High Court's judgment in case of ICI India Limited v. CC, Calcutta reported in 2005 (184) E.L.T. 339 (Cal.), the SLP to Hon'ble Supreme Court against which has been dismissed vide order reported in 2005 (187) E.L.T. A31(S.C.), and (c) Judgment of Hon'ble Punjab & Haryana High Court in case of CC, Amritsar v. ATM International reported in 2008 (222) E.L.T. 194 (P&H), the imports would have to be treated as if made without any advance licence and accordingly the customs duty exemption would not be available and since the goods had been cleared by availing full duty exemption, the imports would be liable to pay the duty. 6.1.2 As regards the applicability of extended period for recovery of duty under proviso to Section 28(1) of the Customs Act, 1962, the legal position on this point is now very clear in view of Hon'ble Supreme Court's judgment in case of CC (P) v. Afloat Textiles (I) P. Ltd. reported in 2009 (235) E.L.T. 587 (S.C.) wherein invoking the principle o....
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....ke, obviously fraud was involved and that was sufficient to extend the period of limitation." 16. In view of the above discussion, we do not find any infirmity or perversity in the findings of the learned Tribunal. Consequently, the question as framed is answered in the affirmative in favour of the Department and against the appellants." 14. Conclusion 14.1 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....
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....brokers of fake TRAs and DEPB scrips are liable to be penalised being instrumental in providing such instruments. We uphold the Orders-in-Original. However, in the fitness of the circumstances of the cases and to meet the ends of justice - (1) Penalties are set aside against the importer-appellants while confirming the duty and interest demanded from them. (2) We uphold the penalties imposed on appellant Shri Satish Mohan Agarwal in view of his pivotal role in the entire fraud beginning from making the fake, forged, false, fabricated and fraudulent DEPB scrips/TRAs. (3) Penalties against the following abettor traders/brokers/sub-brokers in appeal are reduced by half as indicated hereunder : - Arising out of Order-in-Original No. 6934/07 dt. 26-11-2007 passed by the Commissioner of Central Excise (Adjudication), Chennai S. No. Appeal No. Appellant and Respondent Status Reduced Penalty (Rs.) 1. C/74/08 Sashi Prakash Lohia (Pankaj Impex) v. CC (Sea-Export) Chennai Broker/ Trader in Licence/ TRA 12,50,000/- Arising out of Order-in-Original No. 6933/07 dt. 26-11-2007 passed by the CCE (Adjudication), Chennai S. No Appeal ....
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....ai Broker/ Dealer in licence 1,50,000/- Arising out of Order-in-Original No. 6931/07 dt. 26-11-2007 passed by the CCE (Adjudication), Chennai S. No. Appeal No. Appellant Status Reduced Penalty (Rs.) 15. C/400/07 C. Mukesh Balar (Maruthi Enterprises) v. CC (Sea-Export) Chennai Broker/ Trader in Licence 1,00,000/- 16. C/401/07 Suresh Kumar Jain (PS-Q Corpn. India) v. CC (Sea-Export) Chennai Broker 1,00,000/- 17. C/402/07 Suresh (Raksha Exports) v. CC (Sea-Export) Chennai Broker/ Trader 1,00,000/- 18. C/71/08 Sashi Prakash Lohia (Pankaj Impex) v. CC (Sea-Export) Chennai Broker/ Trader in Licence 5,00,000/- Arising out of Order-in-Original No. 6876/07 dt. 16-11-2007 passed by the CCE (Adjudication), Chennai S. No. Appeal No. Appellant Status Reduced Penalty (Rs.) 19. C/69/08 Sashi Prakash Lohia (Pankaj Impex) v. CC (Sea-Export) Chennai Trader in DEPB licence 2,50,000/- 20. C/14/08 Neemichand Jain v. CC (Sea-Export) Chennai Broker/ Dealer in Licence 12,500/- 21. C/387/07 P. Suresh Kumar (Raksha Export) v. CC (Sea-Export) Chennai Broker 12,500....
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....sarlla (Ganapathy Enterprises) v. CC (Sea-Export) Chennai Trader 75,000/- 36. C/79/08 Sashi Prakash Lohia (Prop. Pankaj Impex) v. CC (Sea-Export) Chennai Trader in DEPB licence 1,00,000 Arising out of Order-in-Original No. 6946/07 dt. 30-11-2007 passed by the CCE (Adjudication), Chennai S. No. Appeal No. Appellant Status Reduced Penalty (Rs.) 37. C/77/08 Sashi Prakash Lohia v. CC (Sea-Export) Chennai Trader in DEPB licence 37,500/- 38. C/15/08 Neemichand Jain (Rajendra Enterprises) v. CC (Sea-Export) Chennai Broker in Licence 35,000/- Arising out of Order-in-Original No. 7453/08 dt. 25-3-2008 passed by the CCE (Adjudication), Chennai S. No. Appeal No. Appellant Status Reduced Penalty (Rs.) 39. C/153/08 Mukesh Balar v. CC (Sea-Export) Chennai Broker/ Dealer of Licence 5,00,000/- 40. C/154/08 Suresh Kumar (Raksha Exports) v. CC (Sea-Export) Chennai Broker 5,00,000/- 41. C/170/08 S.P. Lohia v. CC (Sea-Export) Chennai Broker/ Commission Agent 5,00,000/- Arising out of Order-in-Original No. 6945/07 dt. 30-11-07 passed by the CCE (Adjudication), Chennai ....