TaxTMI 
TaxTMI 
2022 (3) TMI 1005
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....de, and on the basis of such documents, duty evasions were being made at the time of import by discharging duty liability using such fraudulently procured scrips. As per the Department, such fake export documents were being shown to be made from one of the non-EDI, Land Customs Stations, namely Ghojadanga Land Customs Stations (LCS) under the jurisdiction of Commissionerate of Customs (Preventive), West Bengal, wherein, two persons, namely Shri Paresh Daftry of Kolkata and Shri Jyoti Biswas of Maslandpur (a place near Ghojadanga LCS) have been found to be involved in the said fraudulent activities. 3. As per the Department, it was found that the person Shri Paresh Daftry, based at 46, Ezra Street, 1st Floor, Kolkata-700 001 and partner of Zenith Shoppe, 126/137, Radha Bazar Street, Kolkata, were the key persons along with their associates, used to prepare fake export documents on the basis of which licenses under DEPB/DFIA/FPS/VKUGY schemes were used to be obtained. Shri Paresh Daftry in connivance with so called exporters, used to sell the subject licenses through license brokers. As per the Department, the present case is in respect of alleged fake and fraudulent licence....
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....nst so called exports made under DEPB licences (10 in numbers), were found genuine. In case of DFIA licences obtained by said firm, available 09(nine) BRCs were also found to be genuine. (iv) In case of M/s. Yashraj International available 17 BRCs were found to be genuine. (v) In case of M/s Vardhman International two BRCs were found to be genuine. It is seen that 47 BRCs corresponding to exports under the 49 (fourty nine) fake bills of exports are genuine. BRCs particulars for export, under rest of Bills of Export (4 shipping Bills) pertaining to 4 DFIA licences could not be verified, due to non-availability of BRCs. Report regarding 4 BRCs is still pending. 49 cases, where BRCs are genuine and the remittances from overseas were received, indicates illegal transfer of money to India through banking channel, as no exports had actually taken place. Corresponding reference letters of concerned banks along with their enclosures as received are among one of the relied upon documents to the notice. 6. So far the appellant, M/s. Neev Trading is concerned, they have allegedly used licenses as follows:- Sl.N o....
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....ly obtained licenses cannot disassociate themselves from the fraud or suppression committed by their predecessor i.e. M/s.Royal International, while obtaining such fake and fraudulent licenses by way of fake export documents. The fraud or suppression of M/s. Royal International continues to flow to them as the documents for obtaining such licenses are not genuine. Thus, the extended period of time for 5 years for issuance of show cause notice under Section 28(4) of the Customs Act, 1962 could be invoked against the original holder of fraudulent or forged licenses, the same could be invoked against the successor or purchaser i.e. M/s. Neev Trading Company (appellant) utilizing the fraudulently obtained license has also made itself liable for penal action under Section 114 A of the Customs Act, 1962. 9. So far appellant, M/s Vids Overseas is concerned, they have utilised the licence for payment of import duty as follows:- Sl.No. Licence No. License Date CIF value Allowed (in Rs.) Bill of Entry No.& Date Import Quantity Duty Foregone (in Rs.) CIF Value utilised Rs. 1. 0310603943 01.12.2010 2088786.8 2620266 date....
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....e of the exporters with forged TRA (Telegraphic Release Advice) (which is not the case of the Appellant), and the other is with respect to DFIA Licenses regarding which no such allegation of forged TRA have been made/discussed. As submitted above, the Appellant's case is pertaining to DFIA Licenses. 14. The DFIA Licenses pertaining to Appellant's case, were purchased from open market. Said licenses were registered at Nhava Sheva Port (which is an EDI Port) and imports were made by the Appellant through Tuticorin Port, Chennai (which is also an EDI Port). At the time of Import by the Appellant, the Licenses were checked on DGFT Website and undisputedly, the same were valid and duly registered with Customs. It is thus, submitted that the Appellant is a bonafide importer who purchased the DFIA Licenses from open market; duly utilized the same for import of goods and at the time of import, the Licenses were valid and active and were also duly registered with Customs. Just because the licenses were obtained by the Exporter fraudulently, as alleged by the department, import made by the Appellant cannot be treated as non-duty paid, as the Licenses were duly issued by DGFT and wer....
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....t the licence has been obtained by the importer by mis-representation and hence, the licence issued to him was non est in the eyes of law. This contention of the Revenue was rejected by the Supreme Court. It was also held by the Supreme Court, erring in favour of the Revenue, that even if principles enunciated under the law of contract are applied and the licence is treated as a contract between the Government and the licence-holder, the licence is voidable at the instance of the licensing authority and the licence does not become void ab initio. Therefore, the transferred licence and transferee has the option and they do not hold a licence which is void. 31. The (a) general principle is that no one can give what he has not got. However there are exceptions to this principle. This general principle and the exceptions are provided in Section 29 of the Sale of Goods Act, 1930. Section 29 of the Sale of Goods Act reads as under : "29. Sale by person in possession under voidable contract. - When the seller of goods has obtained possession thereof under a contract voidable under Section 19 or Section 19A of the Indian Contract Act, 1872 (9 of 19....
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....le obtaining licences. If that be so, the concept that fraud vitiates everything would not be applicable to the cases where the transaction of transfer of licence is for value, without notice arising out of mercantile transactions, governed by common law and not by provisions of any statute." (b) This decision was followed by the Bombay High Court itself in Sanjay SanwarmalAgarwal v. UOI - 2004 (169) E.L.T. 261 (Bom). In this case, it has been held in respect of advance licence under EXIM Policy. The licence of the transferee was suspended by the Licensing Authority on the ground of initiation of enquiry by Customs authorities against the transferor and imported goods of the transferee were seized. The licence was transferred on completion of export obligation and after audit of DEC books by Customs authorities. In such circumstances, it is observed that the Customs authorities were wrong in not accepting the licence and goods were not liable to duty entitling the petitioner to claim refund of duty paid under protest. 33. Where transfer has been effected without notice to the transferee of alleged fraud, the concept of fraud vitiates everything, is not....
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....rt Act. It has been further held that fraud or misrepresentation only renders a licence voidable and it becomes inoperative once it is cancelled. This Tribunal recently in case of Khaas Textiles Pvt. Ltd. Vs. Additional Director General (Adj.), DRI, New Delhi (Delhi Bench) (wherein Sitting Member Judicial in the present case was presiding), followed the ratio laid down by the Hon'ble Punjab & Haryana High Court in Pee Jay International judgment (supra), set aside the demand raised against the importer on similar allegations as raised in the present case. In fact, demand in said case had arisen out of same investigation proceeding, pertaining to scrips issued on the basis of export documents filed at Khozadanga LCS. ROM Application filed by the department in Khaas Textiles case has also been dismissed vide order dated 09.01.2020. 19. It is pertinent to mention that the department, in their compilation, submitted the judgment of this Tribunal in case of Mercedes Benz India Pvt. Ltd. reported in 2020-TIOL-996-CESTAT-DEL wherein cases of some of the importers against whom demand was raised in same investigation, have been decided against the importers. But, during the course o....
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....ook of Procedure' which provides to register the DFIA License at any of the Port(s) specified in the said para. In appellant's case, the DFIA Licenses were registered at NhavaSheva which is a specified Port as per said para. Further, para 4.19.2 provides that requirement of TRA shall not be there if Port of Registration and Port of Import are EDI enabled and authorization holder has registered its authorization. In the present case Port of Import was Tuticorin which is also an EDI Port. Thus, Port of Registration as well as Port of Import, both were EDI Ports in case of Appellant and therefore, question of forged TRA in case of Appellant does not arise. In view of aforesaid, there is no applicability of Merecese Benz judgment of the Tribunal to the Appellant's case. Further, DFIA is completely different from DEPB scrips. Para 4.40.1 provides that DEPB shall be issued with single Port of Registration which will be the port from where the exports have been effected, whereas, there is no such condition regarding DFIA Licenses. Apart from aforesaid, it is also pertinent to mention that though judgment of Friends Trading Co. has been heavily relied upon to give findings, but the judgmen....
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....oyed the article "the" not accidently, but with the intention to designate the proper officer who had assessed the goods at the time of clearance. It must be clarified that the proper officer need not be the very officer who cleared the goods but may be his successor in office or any other officer authorised to exercise the powers within the same office. In this case, anyone authorised from the Appraisal Group. Assessment is a term which includes determination of the dutiability of any goods and the amount of duty payable with reference to, inter alia, exemption or concession of customs duty vide Section 2 (2) (c) of the Customs Act, 1962." It has been further observed by the Apex Court, "the nature of the power to recover the duty, not paid or short paid after the goods have been assessed and cleared for import, is broadly a power to review the earlier decision of assessment. Such a power is not inherent in any authority. Indeed, it has been conferred by Section 28 and other related provisions. The power has been so conferred specifically on "the proper officer" which must necessarily mean the proper officer who, in the first instance, assessed and cleared the goods i.e. the Deput....
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....Commissioner of Customs has been entrusted with the functions under Section 28, vide Sl. No.3 above. By reason of the fact that the functions are assigned to officers referred to in Column (3) and those officers above the rank of officers mentioned in Column (2), the Commissioner of Customs would be included as an officer entitled to perform the function under Section 28 of the Act conferred on a Deputy Commissioner or Assistant Commissioner but the notification appears to be ill-founded. The notification is purported to have been issued in exercise of powers under sub-Section (34) of Section 2 of the Customs Act. This section does not confer any powers on any authority to entrust any functions to officers. The sub-Section is part of the definitions clause of the Act, it merely defines a proper officer. .......................... 21. If it was intended that officers of the Directorate of Revenue Intelligence who are officers of Central Government should be entrusted with functions of the Customs officers, it was imperative that the Central Government should have done so in exercise of its power under Section 6 of the Act. The reason why such a power is conferred on the Cen....
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.... demand raised against the Appellant in the present case is without jurisdiction. It is pertinent to mention that the said ratio laid down by the Hon'ble Supreme Court, of DRI not having jurisdiction to raise demand under Section 28 (4) of the Customs Act, has been further followed by the Tribunal as well in number of cases. Few of such cases are as below - (i) Principal Commissioner, Customs, ACC Import Commissionerate New Customs House vs. Dish TV India Limited, Rajeev Dalmia and Virender Targa (Vice-Versa) reported in 2021 (10) TMI 771 - CESTAT Delhi. (ii) C. Magudapathy vs. Commissioner of Customs (Seaport-Export) reported in 2021 (9) TMI 636 - CESTAT Chennai (iii) M/s. Modern Insecticides Limited vs. Commissioner of Customs, Ludhiana reported in 2021 (10) TMI 598 - CESTAT Chandigarh. (iv) Dhiren Enterprise vs. Commissioner of Customs (Adjudication) - Customs Appeal No. 893 of 2012. (v) M/s Schweitzer Engineering Laboratories Pvt. Ltd Vs. Commissioner of Customs (Import) - Customs Appeal No. 51570 of 2019. The abovementioned cases have been relied upon by the Appellant in their written sub....
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....ered by the Customs at the Port. It is also an undisputed fact that the Appellant had no role or involvement in alleged fraud (even if any) done by the exporters for obtaining Licenses. Therefore, extended period of limitation cannon be invoked against the Appellants. The Hon'ble Supreme Court in the case of Uniworth Textiles Ltd. Vs. Commissioner of Central Excise, Raipur reported in 2013 (288) ELT 161(SC) has dealt with the scope of extended period of limitation on the grounds, "suppression of facts, willful mis-representation of facts etc." and thereby held in clear terms that extended period cannot be invoked unless it is shown that the Appellant deliberately colluded with the exporter who fraudulently obtained licenses, willfully mis-stated or suppressed any material facts known to them, which led to evasion of duty. Hence, extended period cannot be invoked against the Appellants. The Hon'ble High Court of Allahabad in the case of Commissioner of Customs, Central Excise & Service Tax VS. Monsanto Manufacturer Pvt. Ltd. reported in 2014 (35) STR 177, held that once any case is barred by imitation, then there is no need to proceed for looking into the merit, of the case. 27.&....
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.... record of DGFT. 29. Nowhere it is the case of the Department that these appellants colluded with any of the persons concerned, for alleged fraud/ forgery/ manipulation of the documents on the basis of which, licenses were obtained. Nor it is the case of the Department that these appellants wilfully mis-stated any of the material facts with regard to their import consignments. Neither it is the case that these appellants suppressed any facts with intent to evade payment of duty. The only observation in the show cause notice and the impugned order is that these appellants did not exercise due diligence in checking the correctness of exports on the basis of which documents DEPB/DFIA licences were issued. 30. Once the DGFT makes the licences transferrable and negotiable on fulfilment of the export obligation, the licences are transferable by delivery and/or endorsement to the transferee. Once the licence is made transferable, the same are traded by the parties through brokers, which is permitted under the DGFT Policy and Foreign Trade Policy. There was no reasons to disbelief the licences issued by the Competent Authority/DGFT. Thus, the same were duly reflecte....
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....eriod because the assessee-respondent could not be accused of mis-representation, collusion or suppression of facts within the meaning of proviso postulated by Section 28 of the Customs Act. Therefore, there is no merit in this appeal. 10. This judgment was further affirmed by Hon'ble Supreme Court reported in 2007 (218) ELT (349) (P&H). In case of M/s Deep Export vs Commissioner of Customs reported in 2016 (338) ELT 724 (Tri-Del)] it has been held at para 9, 10, 11 that REP license obtained fraudulently by transferee on the forged documents the appellant were not in the knowledge of such fraud cannot be held to be ineligible for benefit under license. 11. We have also considered the submissions of Ld. AR and has as reliance in case of Friends Trading company vs. Union of India 2010 (254) ELT 654 (P & H). However, the case is distinguishable from the present case on account of the fact that in that case DEPB scrips were cancelled by the competent authority which is not the case here and hence this judgment has no application in the present case. Even as of now the Department has not been able to produce any evidence about the present licence having bee....