AI Drafter 
TaxTMI 
TaxTMI 
2017 (12) TMI 245
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....ere assessed as they have satisfied the conditions of the notification at the time of importation. Subsequently based on certain intelligence received by the officers, enquiries were conducted. The enquiry revealed that the licence has been obtained by forging Telegraphic Release Advice (TRA) issued by customs authorities. The signature and stamps of the customs officers were forged to show fake exports. Based on such documents FPS licence was obtained by one Shri Krishnav Enterprises, Dadri, U.P. The FPS licence issued to M/s Krishnav Enterprises was sold/transferred to the appellants who used the said licence for duty free import of goods. On conclusion of the enquiry, proceedings were initiated against the appellant as well as M/s Krishn....
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....y suppressed the material fact and made willful wrong declaration to the Licencing Authority to obtain benefit, extended period of limitation would be available against the appellant who is the transferee of the said licence. Applying the ratio of this decision, he submitted that the fraud vitiates all subsequent actions and accordingly the appellant cannot escape the liability to duty which has to be discharged as the Licence was obtained by fraudulent means. 4. We have heard both the sides and perused the appeal record. The facts of the case that the appellants obtained a bonafide valid licence issued by the Competent Authority is not in dispute. Subsequent investigations revealed that the licence was obtained by M/s Krishnav Enterpris....
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....thout licence in contravention of the order issued under Section 3 of the Act so as to bring the case within Clause (8) of Section 167 of the Sea Customs Act. Assuming that the principles of law of contract apply to the issue of a licence under the Act, a licence obtained by fraud is only voidable : it is good till avoided in the manner prescribed by law. On May 1, 1948, the Central Government issued an order in exercise of the power conferred on it by Section 3 of the Act to provide for licences obtained by misrepresentation, among others, and it reads : In the circumstances, we must hold that when the goods were imported, they were imported under a valid licence and therefore it is not possible to say that the goods imported wher....
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.... that these decisions were dealing with forged DEPB scripts. As already noted in the present case we are not dealing with forged licences. The licences have been issued by Competent Authority and were valid till they were cancelled by the competent authority. They were not forged licences. Various case laws examined indicate that the consequences of bona fide buyer using a forged licence or bona fide buyer using a genuine licence but obtained on submission of fabricated or forged documents by the transferors vary. 14. Tribunal in CC v. Patiala Castings Pvt. Ltd. - 2012 (283) E.L.T. 269 examined this issue and held that in the absence of evidence that the transferee have not acted bona fide or was aware of the fraud committed by the....
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....ty to take steps in that behalf." From the aforesaid observation of the Supreme Court, it immediately becomes clear that as long as the licences are valid, the customs authorities cannot refuse exemption on the allegation that there was misrepresentation. It is for the licensing authority to take up the question of misrepresentation. This has not been done in the facts of the present case. The licences were still valid and had not been cancelled by the licensing authority and the licences have not been questioned at all by the licensing authority. It is the customs authorities who have raised the issue with regard to misrepresentation by the predecessors-in-interest of the petitioners at the time of obtaining the licences. That cannot....
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....ontrary to rules, fraudulently or through misleading statement on the part of the importer concerned; or (ii) when it is found that the licensee has not complied with any one or more of the conditions subject to which the licence may have been issued. SCHEDULE Clauses Licencing authority Cancelling authority Clause (xiii) Any officer authorizes by the Central Government. Chief Controller of Imports and/or Govt. of India." This order, therefore, authorised the Government of India or the Chief Controller of Imports to cancel such licences and make them ineffective. The specified authority has not cancelled the licence issued in this case on the ground that the condition h....