TaxTMI 
TaxTMI 
2016 (2) TMI 538
X X X X Extracts X X X X
X X X X Extracts X X X X
....41035 to 41046/2015 on 5.8.2015 restoring these 12 appeals to its file for hearing on merit. Accordingly all these appeals were heard analogous and disposed by this common order for the common cause, material facts and evidence involved in such appeals including the law applicable equally to all such appeals. 2. Appeal registered as No. C/146/2002although arose out of the same cause and evidence as is involved in the above batch of appeals, that could not be listed pending search of that record by Registry. Registry, upon tracing that record, shall list the same issuing appropriate notice for hearing. 3. It was alleged by investigation that the Appellant stationed in Delhi at the address: No.1598, Main Bazar, Paharganj, New Delhi 110 055had sold fake, forged and fabricated DEPB scrips covered by different Telegraphic Release Advice (TRA)by his concern: M/s. Casino Electronic Private Ltd to one Sri Sashi Prakash Lohiya of Chennai raising debit notes and collecting the sale proceeds on that basis. Those were later sold by Sri Lohiya to different importers in Chennai through brokers and were used by imports to clear the imports duty free. That caused huge loss of Revenue for which t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ers, it was noticed by Investigation that certain TRAs mentioned therein used by the importers for clearance of the imports were false, fake, forged and fabricated and the DEPB scrips mentioned therein were either not at all transferred by owners thereof to the importers or the DEPB scrips mentioned in the TRAs were found to be false being different from the scrips registered at the port of export. 5.2 Investigation noticed that Appellant was Trader of the impugned TRAs and sold the same to one Sri Sashi Prakash Lohiya, who ultimately sold that to different importers through brokers and were used at the Chennai Port to make imports duty free. The DEPB scrips mentioned in the TRAs although were claimed to have been registered at the Jawaharlal Nehru Customs House, Nhava Sheva, Mumbai, were not at all lawfully transferred by the owners thereof to the importers of Chennai and even the scrips mentioned in some of the TRAs differed with the scrips registered at the above port of export. 5.3 Search was made to premises of Sri Sashi Prakash Lohiaand his statement was recorded by investigation u/s 108 of Customs Act, 1962 on 17.11.2004. That revealed that he was the Proprietor of M/s. Pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bmitted that for no infraction of law made by the appellant he shall not be liable to penalty under law. If at all, the allegation against the appellant is proved by Revenue, his action/omissions made prior to clearance of the goods does not bring him to the fold of law for penalty following the decision of the Hon'ble High Court of Gujarat in the case of Commissioner of Customs Vs. Sanjay Agarwal 2011 (269) ELT 153 (Guj.). 6.2 In spite of the right to be heard, the appellant was not at all heard by the authority below before passing the order even though on several occasions lawyer for the appellant appeared before the Commissioner of Customs. 6.3 The proceeding is time-barred since the notice itself was belatedly issued to unreasonably bring the appellant to consequence of penalty. There was no forgery of DEPB scrips or TRA done by the appellant. 6.4 Learned Commissioner in Para 24 of his order has found that the appellants role was only to introduce Mr.Sajiad Khan, to Sri Lohiya. Sri Khan as an employee at Customs House, Nhava Sheva, had access to DEPB register, had colluded with Sri Lohiya to hatch conspiracy against Revenue divulging the details of DEPB scrips to him. There....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nable and appellant is entitled to appropriate relief exonerating him from penalty. ARGUMENTS OF REVENUE 7. Learned DR appearing for Revenue supporting the adjudication orders, submitted that the appellant as well as Sri Sashi Prakash Lohia were mastermind of the racket selling false, fake, forged and fabricated TRAs with the DEPB scrips mentioned therein to defraud Revenue for which the adjudications have been rightly made. That should not be interfered or the appellant granted any immunity from penalty. Entire material on record speaks against him. He hatched conspiracy against Revenue. Loss of Revenue is attributable to his malafide. When he neither controverted any of the allegations made against him nor impeached the evidence gathered by Revenue to prove his case, all his appeals are liable to be dismissed. FINDINGS AND CONCLUSION BY TRIBUNAL 8.1 Heard both sides and perused records. 8.2 The issues involved in this batch of appeals is whether the DEPB scrips/TRAs used to discharge import duty liability were fake, forged and fabricated causing jeopardy to the interest of Revenue and whether the appellant committed any act in this regard to defraud Revenue and incurred liab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....04.05 and 09.05.05. He did not come out with clean hands to defend him. Summonses were also issued to Shri Sashi Prakash Lohia to cause appearance on 02.12.04, 30.03.05, 25.04.05 & 27.05.05.He also avoided the same. Deliberate defiance of law made by appellant dragged him to criminal prosecution filing complaint against him under Section 174 & 175 of Indian Penal Code read with Section 108 of the Customs Act, 1962 in the Court of learned Additional Chief Metropolitan Magistrate Court, Economic Offence-I, Egmore. FRAUD IN THE EYES OF LAW 9.1 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 is considered to be fraud in the eyes of law. It is also well settled that misrepresentation itself amounts to fraud when that results in deceiving and leading a man into damage by willfully or recklessly causing him to believe on falsehood. Of course, innocent misrepresentation may give reason to claim relief against fraud. In the case of Commissioner of Customs, Kandlav. Essar Oil Ltd. - 2004 (172) E.L.T. 433 (S.C.) it has been held that by fraud is meant an intention to de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ions, which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad. [Ref:Commissioner of Customs v.Essar Oil Ltd., (2004) 11 SCC 364 = 2004 (172) E.L.T. 433 (S.C.)]. 9.5 When material evidence establishes fraud against Revenue, white collar crimes committed under absolute secrecy shall not be exonerated as has been held by Apex Court judgment in the case of K.I.Pavunnyv. AC, Cochin - 1997 (90) E.L.T. 241 (S.C.). No adjudication is barred under Section 28 of the Customs Act, 1962 if Revenue is defrauded for the reason that 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. 9.6 It is cardinal principle of law which is enshrined in Section 17 of Limitation Act that fraud nullifies everything for which plea of time bar is untenable following the ratio laid down by Apex Court in the case of CC. v. Candid Enterprises - 2001 (130) E.L.T. 404 (S.C.). Non est instruments at all ti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntravention of the law or abetting to achieve such ill object, such act against public Revenue calls for penal consequence to curb such mischief. 10.3 Penal provisions are enacted to suppress the evil of defrauding Revenue which is an anti-social activity adversely affecting the public revenues, the earning of foreign exchange, the financial stability and the economy of the country. Such provisions should be construed in a manner which would suppress the mischief, promote their object, prevent their subtle evasion and foil their artful circumvention. Thus construed, the term fraud within the meaning of these penal provisions is wide enough to take in its fold any one or series of acts committed. Such act or acts being reasonably proximate to the clearance of imports duty free on the basis of forged documents, the appellant as a trader, is liable to penalties under law. 11.1 It was the argument of the appellant that there was neither infraction of law made by the appellant nor Revenue proved its case for which penalty under section 112(a) of the Customs Act, 1962 is not imposable. It may be stated that Revenue need not prove its case with mathematical precision. Appellant perpetua....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g with fake TRAs with DEPB scrips, he cannot escape from penal consequence under law. He wilfully evaded summons issued by investigation and failed to cooperate with them to discover the truth. That proved that apprehending his own guilt, he did not come out with clean hands to defend him. Learned authority below has not acted casually, or in any cursory manner to deal the appellant. He had very minutely and meticulously scrutinised the evidence and evaluated the same as well as passed a reasoned and speaking order. 11.5 Further contention of the appellant was that Shri Sashi Prakash Lohia was hostile to impute the appellant to the charge. But such allegation has no basis without any material brought to the record by investigation. Appellant being aware that he was unduly enriched at the cost of Revenue, he crippled himself to claim immunity under law. 11.6 Appellant raised the plea that no discovery of incriminating evidence by search party from the premises of the appellant during search makes the adjudication fatal is of no avail when surrounding circumstances and cogent evidence on record suggest involvement of the appellant in commitment of the offence against Revenue. 11.7....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e process of law and granting fair opportunity of hearing to the appellant. Therefore plea of violation of natural justice made by appellant fails. 12.3 When fraud was established that has unravelled all. Revenues 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 Court in CC v. Candid Enterprises - 2001 (130) E.L.T. 404 (S.C.) and in the case of Delhi Development Authority v. Skipper Construction Company (P) Ltd - AIR 1996 (SC) 2005. The fraud committed by the appellant void all judicial acts, ecclesiastical or temporal and there was no good title over the DEPB scrips/TRAs. 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.). Thus, the adjudications were not time-barred and Section 28 of the Customs Act, 1962 was rightly invoked by the Adjudicating Authority in view of fraud committed against Revenue. 12.4 Upholding the decision of the Tri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eeds; at his peril if he does not. 25. Upon a sale of goods, the general rule with regard to their nature or quality is caveat emptor, so that in the absence of fraud, the buyer has no remedy against the seller for any defect in the goods not covered by some condition or warranty, expressed or implied. It is beyond all doubt that, by the general rules of law there is no warranty of quality arising from the bare contract of sale of goods, and that where there has been no fraud, a buyer who has not obtained an express warranty, takes all risk to defect in the goods, unless there are circumstances beyond to mere fact of sale from which a warranty may be implied. 26. No one ought in ignorance to buy that which is the right of another. The buyer according to the maxim has to be cautious, as the risk is his and not that of the seller. 27. Whether the buyer had made any enquiry as to the genuineness of the licence within his special knowledge. He has to establish that he made enquiry and took requisite precautions to find out about the genuineness of the SIL which he was purchasing. If he has not done that, consequences have to follow. These aspects do not appear to have been consid....