TaxTMI 
TaxTMI 
2007 (8) TMI 204
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....assessee-respondent. The revenue has claimed that the following substantial question of law would emerge for determination of this Court :- "Whether in the facts and circumstances of the case, assessee-respondents are liable for penal action under Section 112 (b) of the Customs Act, 1962, on account of fraudulent availment of Duty Entitlement Pass Book (DEPB) benefit on the basis of forged Bank Certificate of Export and Realisation (BCER)?" 2. Brief facts of the case may first be noticed. The assessee M/s ATM International is a partnership concern and they are engaged in the export of various items. On the basis of intelligence reports, Anti-Smuggling Unit of Customs Commissionerate, Amritsar, initiated investigation against the assessee-respondents, who were alleged to be involved in fraudulent availment of credit on the export of goods under Duty Entitlement Pass Book Scheme (DEPB) by forging documents. A show cause notice after investigation was issued on 3.5.2002 to the assessee-respondent No. 1 and its partners (assessee-respondent Nos. 2, 3, 4 and 5), which was answerable to the Commissioner of Customs, Amritsar. The allegation in the show cause notice revealed that aft....
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....were got issued by Noticee No. 2 on the basis of fake BRCs, which have been cancelled ab-initio by the licensing authority. In this connection I find that similar issue came up for consideration before the Hon'ble Tribunal in the case of ICI India Ltd. Vs. Commissioner of Customs, Calcutta cited as 2003 (151) ELT 336 (Tri). The Hon'ble CEGAT after consideration observed that "Fake documents ab initio unlawful". It was also held "no benefit could accrue to their holder and no credit of duty could be taken on them, denial of benefit of Notification No. 34/97-Cus dated 7.4.1997 upheld". The Tribunal also held that fake document is ab-initio unlawful and void. Any amount of official action upon such a document cannot sanctify it or otherwise make it lawful. Such a document cannot give rise to any right or benefit in law. This is a legal position settled by the Hon'ble Supreme Court in New India Assurance Co. Vs. Kamla and others 2001 (4) SCC 342. The Tribunal also observed that in the Show Cause Notice proposal was to confiscate the imported goods under section 111(O) of the Act and demand of duty under Section 28(I) of the Act. The Tribunal disposed of the appeal by the co....
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....on the basis of documents signed by him. He admitted that the applications for DEPB's in respect of Shipping Bill No. 2900 dated 3.9.1999, 156 dated 14.6.1999, 4040 dated 21.12.1999 and 4222 dated 16.11.1999 were signed by him. I further observe that another partner of the firm Sh. Mukesh Kumar (Noticee No. 5) also participated in the commissioning of the fraud by way of signing the applications for DEPB's in respect of Shipping Bill No. 33 dated 30.1.2000, 6728 dated 25.7.2000, 7248 dated 7.8.2000, 4739 dated 17.12.1999, 4687 dated 14.12.1999 and 4410 dated 27.11.1999 in the absence of Noticee No. 3. So both the Noticee No. 3 and 5 have actively connived with the firm in the commissioning of the fraud. 28. I also observe that as per records Sh. Tara Singh (Noticee no. 4) was looking after raw material and production of the firm. He was also looking after purchase of raw material and making arrangement of labour. I further observe that Sh. Yogesh Kumar (Noticee No. 6) was a partner of the firm. He was running a shop in the name and style of M/s LOOKS, Jalandhar. The Noticee No. 4 and 6 were party to profit/loss incurred to the firm and are accountable for the affairs....
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.... issue of penalty in favour of the revenue. According to the learned counsel once the assessee-respondents have been found to have indulged in forgery and other activities then the penalty proceedings are necessary consequence. The penalty proceedings could be validly initiated and penalty was rightly imposed by the Adjudicating Authority. He has further submitted that merely because reference to sub-sections of Section 112 of the Act was not made in the show cause notice, would not be suffice to declare the penalties as illegal unless the assessee-respondents are able to show that they had suffered a prejudice by omission to mention the sub-sections because rules of natural justice are not mechanical in their application. Learned counsel has maintained that the assessee-respondents have been granted detailed hearing. They have filed reply to the show cause notice, then the opportunity to file written arguments and personal hearing were granted. If principles of natural justice by granting numerous opportunities have been followed then mere omission to mention sub-sections of Section 112 of the Act could not result into declaring the impugned order as illegal in the absence o....
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....chnical grounds that under Section 112 of the Act, penalty could have been imposed only on the importer or any person who abets the importer. One principle which has been established beyond any doubt is that fraud vitiates all acts. Hon'ble the Supreme Court in the case of S.P. Chengalvaraya Naidu v. Jagannath, (1994) 1 SCC 1, in that regard has observed as under:- "Fraud avoids all judicial acts, ecclesiastical or temporal" observed Chief Justice Edward Coke of England about three centuries ago. It is the settled proposition of law that a judgment or decree obtained by playing fraud on the court is a nullity and non est in the eyes of law. Such a judgment/decree - by the first court or by the highest court - has to be treated as a nullity by every court, whether superior or inferior. It can be challenged in any court even in collateral proceedings." 11. The aforementioned view has been followed in the case of Hamza Haji v. State of Kerala, (2006) 7 SCC 416. We are further of the view that the findings recorded by the Adjudicating Authority are well founded because in addition to other evidence on record, respondent No. 2 himself has admitted commission of forgery for having ....