2008 (3) TMI 159

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.... relevant facts, in brief, are as follows :- (i) The appellant company M/s. Munjal Showa Ltd. imported consignments through ICD Ballabgarh using transfer release advices (TRA) issued by Mumbai Customs House. (ii) The Customs authorities, Ballabgarh initiated verification with the Mumbai Customs authorities and came to know that the DEPB licences based on which TRAs were issued by them were not genuine and the results of this verification were communicated to the appellant company and thereupon the appellant company paid the duty amounting to Rs. 1,29,43,927/- on 12th August, 2003. (iii) Show cause notice dated 3rd October, 2006 was issued proposing confirmation of the duty paid as above and proposing penalty on the company, on Shri....

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....t fraud vitiates every transaction; that a fraud inter vivos stands on a different footing from a fraud against the State. The appellant company has not proved that they were bona fide purchasers of DEPB scrips. But for the intervention by the department, the fraud would have gone unnoticed causing heavy damage to the revenue and that the appellants have taken calculated risks. He submits that in the given facts and circumstances of the case not only duty is liable to be confirmed, penalties are also warranted on the appellants and that redemption fine imposed is also justified. He also relies on the decision of the Tribunal in the case of M/s. New Kailash Jewel House v. CCE, New Delhi reported in 2006 (206) E.L.T. 1046 in support of his co....

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.... and that they are only victims of fraud by others. Forged licences have no legal sanctity or validity. On a forged licence, the benefit of exemption notification cannot be allowed as it will amount to legalizing fraud. We are of the considered view that no benefit arising out of fraud cannot be claimed by the appellant company. 6.1 It is one thing to deny the benefit of exemption on the ground that licences used were fake licences. It is entirely a different thing to take a penal action. Penal action, in our opinion, is warranted only when there is knowledge or intention on the party of the appellants about the fraud committed. The Commissioner has imposed penalties after holding, inter alia as follows :- "Such a plea deserves outrig....