TaxTMI 
TaxTMI 
2007 (8) TMI 712
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....sed under Section 112 (A) of Customs Act, 1962. 2.1 Along with Appeal, the Appellant had also filed stay application praying for stay of realization of demand. Such application was disposed on 17.5.2006 directing pre-deposit of 30% of the amount of penalty imposed, fixing compliance on 11.7.2006. On that date due to failure of the appellant to appear and for no compliance, its appeal was dismissed. Against such order of dismissal, the appellant had gone in Writ Petition before the Hon'ble High Court of Calcutta. Such Writ Petition was registered as W.P. No. 919/2006 and disposed by Judgment dated 25.4.2007 directing the Tribunal to reconsider the prayer of the appellant for dispensation of pre-deposit of the disputed penalty and dispose the Appeal expeditiously. 2.2 Pursuant to the direction of Hon'ble High Court, the Appellant was afforded reasonable opportunity of being heard on 30.5.07, 31.05.07, 14.6.07 and 3.7.07 and on the last occasion of hearing, prayer of the appellant to file written summary of oral submissions with relevant documents relied upon was allowed. The appellant filed written summary of oral submissions on 6th July, 2007 and 9th July, 2007 and such su....
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....Authorities allowed import without payment of duty on the basis of the DEPB purchased from market, the Authorities were satisfied about genuineness of the same at the time of clearance. However, at a later date holding the appellant not entitled to DEPB credit for no reasons attributable to it, has made the Appellant charge free and it should be exonerated from penal consequences of law. In support of the claim, the appellant relied on the payments made by it to the sellers through cheques, which were cleared, from the Bank Accounts. 4. The Ld. JDR appearing for Revenue submitted that when the Appellant had no good title on the DEPB, they cannot claim that they should be relieved of the charges as well as consequences thereof. When the documents were found to be forged to defraud Revenue, the appellant had not come out with clean hands or cogent evidence to contradict charges, before this Tribunal for relief. Their close association with the group of accused in CBI case No. RC - 8/E/02-CAL and RC-10/E/2001-CAL pending before the special court in Kolkata itself proves that the appellant was in close link and connection with them to procure forged DEPB and get credit against the imp....
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....anash Kr. Paul, partner of M/s. Kamala Metachem, stated that the impugned DEPB were procured from one Mr. N.K. Jalan and the payment towards purchase of the said DEPB were made by account payee cheques drawn on Tamilnadu Mercantile Bank Ltd. Calcutta in favour of M/s. National Engineering Works, Tinsukia, Assam, M/s. Imtex Corporation and M/s. Parag International, Assam against Debit Notes issued by them and presented by Mr. N.K. Jalan. Enquiry revealed that the cheques issued in respect of DEPB Nos. 02602431, 02602425 and 02602393 were in favour of M/s. National Engineering Work and M/s. Imtex Corporation were deposited by him in Federal Bank, Clive Row Branch, Kolkata, 8, C.R. Avenue, Kolkata. The cheques issued by Appellant in favour of M/s. Parag International in respect of purchase of DEPB Nos. 02601998 and 02601999 were also enquired into. It further transpired that the Appellant did not verify authenticity and existence of the signature holder and the said firms. In view of the fact that they dealt with non-existent broker firms and unscrupulous persons in the purchase of fake and forged DEPB scrips for clearance of 26 import consignments free of Customs Duty, an allegation ....
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.... in the "DEPB Noting Register" in active collusion with P.K. Agarwal, Appraiser. Smt. Rama Bose was contacted for fictitious accounts in which the proceeds against sale would be deposited. The Verified DEPB were sold by Jalan brothers in Kolkata & Chaudhary Brothers (through Lokesh Agarwal) in Mumbai against Debit Notes and cheques received were deposited/withdrawn by Rama Bose and others. CBI investigation also established that B.N. Jalan & N.K. Jalan were in criminal conspiracy with Jitendra Kumar Chaudhary, Krishna Kumar Chaudhary, Sambhu Guha, Rama Bose, Lokesh R. Agarwal and with ulterior motive and full knowledge and dishonest intention had arranged forged DEPB, got the same verified/approved through Tapabrata Banerjee and P.K. Agarwal and sold the same as genuine. Subsequently the forged DEPB were utilized for the purpose of import causing thereby a loss of Revenue to the Govt. of India towards duty. The persons charged as above are exposed to trial for commitment of offences u/s 120B IPC r/w Section 420, 467, 468 & 471 and Section 13 (2) r/w 13 (i) (d) of P.C. Act 1988 and substantive offences there under. 7. Hon'ble High Court of Calcutta in the case of ICI India Limi....
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.... as contended by Dr. Pal is involved in the present case. This appeal is, therefore, dismissed." The Judgment of Hon'ble High Court of Calcutta in the aforesaid case was appealed by ICI India Ltd. in SLP (Civil) No. 249 of 2005 and such appeal was dismissed - 2005 (187) ELT A31 (SC). 8. Legal Fraud vitiates everything even judgments and orders of the Court. If a transaction has been originally founded on fraud, the original vice will continue to taint it, and not only is the person who has committed fraud is precluded from deriving any benefit under it, but also who derive advantage of it. In the case of Golden Tools International Vs. Joint DGFT, Ludhiana, 2006 (199) ELT 213 (P&H), the Hon'ble High Court has also upheld cancellation of DEPB obtained fraudulently and levy of penalty under Section 11 (2) of the Foreign Trade (Development and Regulation) Act, 1992 was sustained. 9. The observations of the former Lord Chief Justice of England, Sir Edward Coke, more than three centuries ago, that "fraud avoids all judicial acts, ecclesiastical or temporal" was noticed by the Hon'ble Supreme Court in S.P. Chengalvaraya Naidu Vs. Jagannath, AIR 1994 SC 853. The Apex Court o....
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....ion, the Appellant is not immune from consequences of law when the document used for credit of duty at the time of import was non-est being forged or fabricated to evade revenue. In the instant case, the stand of the Appellant that the imports made were initially cleared by the Customs authorities without payment of Customs duty does not absolve it from liability to duty for the basic reason that duty credit as per forged DEPB Pass Books was availed by the Appellant and that remained factually uncontroverted without leading any cogent or credible evidence. We are of the considered view that duty free imports made by the petitioners on the basis of DEPBs', fraudulently obtained tantamount to contravention of the provisions as engrafted by law and thus, no fault can be found with the order of adjudication confirming the duty demand and other consequences that flows from the said order. 12. On consideration of totality of facts and circumstances and the ratio laid down in aforesaid judicial pronouncements we are unable to agree with the submission of the appellant that it is not liable to the consequences of order of adjudication in view of cogent and credible evidence available ....
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.... or the Customs officials. We also note that some of the transfer documents have been signed by Bank officials purporting to verify the signature of the transferers. However, we find to our utter surprise that the Show Cause Notices issued do not bring out the role of any of the D.G.F.T. officials, Customs officials or the Bank officials in the grant of such D.E.P.B.s issued on the basis of fraudulent shipping documents and Bank remittance papers and subsequent grant of duty exemption of a huge amount at the time of clearance of the impugned imported goods. We also note that this is not an isolated case as there are other similar cases cited in paragraph 3 above. Shri Prakash Shah, the learned Advocate for M/s. De-Nocil had infact argued that duty exemption should be allowed since the D.G.F.T. and Customs officials had issued the D.E.P.B. and had failed to verify the authenticity of shipping documents and Bank remittance papers. We are of the view that such action and omission on the part of defaulting individual D.G.F.T. officials and Customs officials cannot be a ground for extending duty exemption when the conditions of the exemption notification issued in public interest are no....