TaxTMI 
TaxTMI 
2022 (3) TMI 1005
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.... 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 licences obtained by M/s. Aum Silk Mills (IEC 0310004....
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....sp; 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. 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. 031060686 0 20.12.2010 4964211.7 8 2648779&nbs....
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....es 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 dated 20.1.2011 81318 SQM 3564651 1483285 3404679 dt.04.05..2011 27787 SQM 3868752 458904 2. 0310619819 13.01.2011 2474145 3404679 dt.04.05.2011 604499.5 2514359 1159245 2679534 dt.31.0d1.2011 65750.5 2874195 1349198 Total &n....
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....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 were valid at the time of import. This Tribunal in case of Deep Exports vs. Commissioner of Customs, New Delhi reported in 2016 (338) ELT 742 (Tri-Del.), in similar situation and similar allegations made in respect of REP Licenses, set aside the demand. Reliance is also placed upon the judgment of the Hon'ble Punjab & Haryana High Court in case of Pee Jay International VS. CC reported in 2016 (340) ELT 625 (P&H). In....
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....nce 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 1972), but the contract has not been rescinded at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of the seller's defect in title." Reference may also be made to the commentary on Sale of Goods by P.S. Atiyah, 8th Edition wherein it has been stated as under : "The great practical importance of this rule is that, if a person buys goods by fraud and disposes of them before the other....
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....f 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 applicable as licence was transferred for value arising out of importable transaction governed by any law." 16. The abovementioned judgment of the Tribunal in Hico Enterprises has been affirmed by the Hon'ble Supreme Court as reported in 2008 (228) ELT 161 (S.C.). The judgment in Hico Enterprises, though has been referred in Eastern Silk case, but has not been discussed. Moreover, the judgment of the Tribunal in Hico Enterprises is a larger Bench Judgment and has been affirmed by Hon'ble Supreme Court as well, therefore, th....
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....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 of argument, same was not argued by the learned departmental representative. Firstly, it is submitted that said judgment passed by this Tribunal in Division Bench matter in Mercedes Benz Case has been challenged before the Hon'ble Delhi High Court vide Customs Appeal CUSAA 49-52 of 2021, wherein, the Hon'ble High Court has been pleased to issue notice, granted time to Respondent Department to file reply as prayed by them. However, said judgment of the Tribunal is not applicable to the present case of the Appellant. It is submitted that case....
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.... 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 judgment of same High Court in Pee Jay International (supra) which has distinguished judgment of Friends Trading, has not been discussed in Mercedes Benz Judgment. In view of aforesaid, it is submitted that said judgment passed by the Tribunal in Mercedes Benz case is not applicable to the Appellant's case. (emp. supplied) 20. Learned Counsel for the appellant further urges that show cause notice demanding customs duty from the Appellant under Section 28 (4) of the Customs Act, 1962 has been issued by the Principal Director General, DRI. ....
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....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 Deputy Commissioner Appraisal Group." The Hon'ble Supreme Court also observed, "it is well known that when a statute directs that the things be done in a certain way, it must be done in that way alone. As in this case, when the statute directs that "the proper officer" can determine duty not levied/not paid, it does not mean any proper officer but that proper officer alone. We find it completely impermissible to allow an officer, who has not passed the original order of assessment, to re-open the assessment on the grounds that the duty was not paid/not....
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....er 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 Central Government is obvious and that is because the Central Government is the authority which appoints both the officers of the Directorate of Revenue Intelligence which is set up under the Notification dated 04.12.1957 issued by the Ministry of Finance and Customs officers who, till 11.5.2002, were appointed by the Central Government. The notification which purports to entrust functions as proper officer under the Customs Act has been issued by the Central Board of Excise and Customs in exercise of non-existing power under Section 2 (34) of the Customs Act. The notifica....
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....sp; 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 submissions as well, and none of them has been rebutted by the Respondent Department. DEMAND IS TIME BARRED 25. It is submitted that the demand has been raised against the Appellant in the present case under Section 28 (4) by invoking extended period of limitation. The learned Adjudicating Authority, while dealing with the submissions made in this regard, in para 83, observed, "A plea has been taken that the demand is time barred as the same has been issued beyond a period of one year. From the foregoing discussion, it has already been concluded that fraud exists in whole exercise of fraudulent export....
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....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. Ld. Authorised Representative, Shri Sunil Kumar relies on the impugned order. He further urges that the appellant have taken benefit based on the licences, which have been obtained by the third persons by fraud and forgery from the DGFT. Further, the appellant have not done due diligence before buying the licence/scrips /using the same. He further relies on the following rulings:- i) Friends Trading Co. -2012 (281) ELT A106 (SC) ii) Friends Trading Co.-2011 (267) ELT 57 (Tri. Del.) iii) Tata Iron & Steel Co. Ltd., -2015 (316) ELT 546 (SC) iv) Friends Trading Co. -2010(258) ELT A-2 (SC)....
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....es 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 reflected on the website of the DGFT. It is not the case of the Department that the licences itself were forged/fabricated. It is an admitted fact that the licences were genuinely issued by the DGFT after due diligence and were valid at the time of imports made by the appellants. In the circumstances, we find that the appellant is correct in relying on the Ruling of the Hon'ble Punjab & Haryana High Court in the case of P.J. International Vs. Commissioner of Customs (Supra). 31. We further observe that the Adjudicating Authority have erred in not appreciating that these appellants were bonafide purchaser of DIFA licences, which were validly issued and made transferable by DGFT, as well as registered by th....