TaxTMI 
TaxTMI 
2015 (12) TMI 1299
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..../s. Eastern Silk Industries Limited, M/s. Lucky Goldstar Limited, M/s.Gemini Overseas Ltd. & Shri Shyam Sundar Shah and Shri S.N. Kantawala (Advocate) appeared on behalf of M/s. Comet Overseas Pvt. Ltd. It is the case of the Advocates that Appellants Eastern Silk Industries Ltd., M/s. Lucky Goldstar Ltd. and M/s. Comet Overseas Pvt. Ltd. are transferees of the Licenses (Transferee Appellants) which were purchased by them on bonafide belief that Licenses were genuine. That DGFT has not cancelled these Licenses so far and all the DFIA Licenses were valid on the date of import of goods. It is thus the case of the appellants that no duty/penalty can be thrust upon the transferee appellants as the duty demand is time barred and no intention to evade payment can be attributed to the transferees of the bonafidely issued licenses.They relied upon the following case laws:- (i) Collector of Customs, Bombay Vs. Sneha Sales Corporation [2000 (121) ELT 577 (S.C.] (ii) Taparia Overseas (P) Ltd. Vs. U.O.I.[2003 (161)ELT 47 (Bom] (iii) Commissioner of Customs Amritsar Vs. Ajay Kumar & Co. [2009 (238) ELT 387 (S.C.)] 2.1 It was strongly argued by the Ad....
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....ith respect to those licenses are fulfilled. That in these appeals his clients purchased DFIA Licenses and such transferable licenses are put up by licensing authority on their website. That such transferable licenses are verified by the Customs authorities. (ii) That his clients (Transferee Appellants) purchased part of such transferable DFIA Licenses from the market after paying due considerations and after verifying these licenses from the website of DGFT and found the same to be duly verified by the Customs Authorities as a good tradeable security. That against these DFIA his clients imported goods in 2008 and no objection was raised at all by the Customs Authorities. iii) That subsequently his clients received show cause notice for demanding duty and imposition of penalty on the grounds that M/s. Gemini Overseas Ltd. has obtained the impugned licenses by fraud and that importers will be liable to pay the duty forgone as per Notification No. 40/2006-CUS DATED 1/5/2008 . iv) That licenses issued by DGFT have not been cancelled so far and appellant was bonafide purchaser of licenses for a valid consideration and had no knowledge till the receipt of show cause notic....
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.... M/s. Gemini Overseas Ltd. An intelligence was received by the Revenue that M/s. Gemini Overseas Ltd. had actually exported fabrics made of Noil Yarn and wrongly declared the same in the export documents to be made predominantly from mulberry raw Silk Yarn. On the basis of said intelligence certain consignments were intercepted at N.S. Docks, Kolkata. Samples of the seized goods were drawn and forwarded to Central Silk Board, Kolkata for testing. As per the test report of the samples taken from the Live consignments, the fabric was found to be made out of Noil Silk Yarn and cotton. Other six consignments of similar fabrics obtained from M/s. Gemini Overseas Ltd. were intercepted from the factory premises of M/s. Eastern Silk Industries Ltd. at SEZ, Falta and subjected to test. Test report of these goods also indicated those fabrics received by appellant M/s. Eastern Silk Industries Ltd.,from M/s. Gemini Overseas Ltd. to be made of Noil Silk Yarn mixed with cotton. On the basis of the above test reports investigations were extended to the earlier period where similar fabrics were manufactured by M/s. Gemini Overseas Ltd. and 23 DFIA Licenses w....
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....mini Overseas Ltd., M/s. P.K. Textile Ltd. & M/s. Lucky Goldstar Co. Ltd. and these units are under his control. M/s. Gemini Overseas Ltd. vide a letter dated 2/1/2009 also admitted that the exports made by M/s. Export Silk Industries Ltd. were similar fabrics which were supplied by them for the earlier period as well as for the consignments seized by DRI. That fabrics exported, for which transferable DFIA Licenses were obtained, were made out of Noil Yarn and expressed willingness to pay the duty fore-gone on account of utilization of said three transferable licenses. 6. In the light of the above factual matrix, it is observed that the nature of fabrics found in the consignments, seized by DRI and tested, was the same which was exported by the Appellant in the earlier export consignments. The stand of the appellants that test reports of fabrics for the subsequent period cannot be made applicable to the earlier period is devoid of merits in the light of investigation done and the statements given by the appellants who were associated with manufacture & export of misdeclared goods. The case law of Well Knit Apparels Pvt. Ltd. Vs. C.C., Madras [1999 (106) E.L.T. 431 (Tribunal]....
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....of the Customs Act, 1962. Section 111 (o) of the Customs Act 1962 is thus relevant in these proceedings and is reproduced below: " (o) any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer." 7.1 Regarding violations of the conditions of a customs exemption notification, Honble Supreme Court in a recent case of C.C., Hyderabad Vs. M/s. Pennar Industries Ltd. [2015-TIOL-162-SC-CUS] held as follows: 14) In the present case, advance licence was issued to the assessee in terms of para 7.4 of the EXIM Policy 1997-2000. It was in terms of this licence that the import of the specified material was permitted on the condition that the assessee is obligated to meet the export obligation as contained in the licence issued by the DGFT. No doubt, this obligation in the export licence, read with conditions contained in Notification No. 30/1997, puts the onus upon the assessee to make the exports of the products produced from the material so imp....
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....ding on the customs authorities and as far as action taken under the Customs Act is concerned, the same is to be covered by the provisions of the Customs Act. The relevant discussion thereupon which takes note of the concerned provisions of the Act as well is reproduced below: "6. Learned counsel placed reliance upon a communication to all Collectors of Central Excise issued by the Central Board of Excise and Customs on 13-5-1969, on the subject of whether, in the event of the contravention of a post-importation condition of an import licence, it was open to the Customs authorities to confiscate imported goods under Section 111(o) of the Customs Act. The said communication stated that before Section 111(o) could be attracted there had "to be an exemption, subject to a condition, from a prohibition :. Where a valid licence has been issued, it is not a case of an exemption from the prohibition. Therefore, if a post-importation condition of a licence is contravened, it cannot be said that any condition of exemption is contravened. For the reasons stated above, the Ministry of Law have advised that it may not be possible to take action under Section 111(o) with respect to the conditi....
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....ment of customs duty and, therefore, the terms of Section 111(o) enable the Customs authorities to investigate." 17) The decision in the aforesaid case, which is of the Coordinate Bench, binds us. 18) Judgment in the case of Titan Medical Systems (P) Ltd. (supra), which was referred to by Mr. Banerji, has no relevance at all. In that case, one of the conditions of duty exemption scheme contained in Notification No. 116/88-CUS was for conversion of raw material into the resultant product involving substantial manufacturing activity. The Court considered the scope of 'substantial manufacture' and held that assembly of various components into finished machines (ultrasound scanners in that case) amounted to substantial manufacture and it was not necessary that manufacturing of substantial amount of component is required. Obviously, the issue was altogether different which has no bearing on the controversy involved in the present case. 19) Since the conditions of the exemption notification are not fulfilled and the law requires strict compliance of the exemption notification, the assessee becomes liable to pay the import duty which was payable, but for the benefit of exemp....
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....he co-ordination bench, Mumbai in the case of Incos ABS (india) Ltd. & others Vs. C.C., Kandla. In this order it has been held by CESTAT, Mumbai that transferees cannot be held responsible for duty and that extended period is not applicable while demanding duty. With due respect we differ with the view expressed orders passed by CESTAT, Mumbai as several case laws, including some recently decided by the Apex Court, were not brought to the notice of CESTAT, Mumbai. On this issue Delhi CESTAT in the case of C.C. Amritsar Vs. Sona Castings [2010 (259) ELT 693 (Tri-Del)] held that fraud vitiates everything and transferee is also responsible to pay duty against such scripts obtained fraudutantly. This conclusion drawn is based on several quoted case laws of Apex Court and High Courts of Kolkata & Punjab & Haryana. The ratio laid down by Calcutta High Court in the case of ICI India Ltd. Vs. C.C. (Port) Calcutta [2005 (184) ELT 334 is squarely applicable to the facts of the present appeal. This order of the Calcutta High Court has also been affirmed by Apex Court as reported at 2005 (187) ELT (S.C.) A 31 (S.C.) where invocation of extended period was also jus....
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....in the licence of the driver driving the vehicle in relation to the liability of the insurer in relation to a valid insurance policy under the Motor Vehicles Act providing for compulsory insurance to secure third party interest. In this case, the document itself having been found to be forged whether there was collusion or fraud on the part of the appellant in the issue of the DEPB licences/scrips becomes absolutely immaterial and irrelevant since no credit can be derived from a forged DEPB. The credit is made available on the strength of a valid DEPB. If the DEPB is forged, then the same is non est and therefore, there is no valid DEPB. As such no credit can be derived thereunder. In such circumstances, one may defend his case that one may not be liable for collusion or fraud and exposed to other penalties therefor, but still then one would be liable to pay the duty and interest and for other statutory consequences which one cannot avoid." 9.1 A script obtained from the Licensing authority fraudulently cannot give licence to any transferee to avail any Customs duty exemption. Fraud in common parlance means dishonest dealing, deceit or cheating etc. It makes no differe....