TaxTMI 
TaxTMI 
2023 (4) TMI 670
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...., as detailed in Annexure - A to the Show Cause Notice, under Section 28 (4) of the Customs Act, 1962 along with applicable interest under Section 28AA of the Customs Act, 1962, against M/s Bimal Paper Pvt. Ltd., Delhi. (ii) I hereby order appropriation of the amount of Rs. 90,00,000/- deposited by M/s Bimal Paper Pvt. Ltd., Delhi vide GAR-7 Challan No. 33243 dated 08/10/2015 against the demand confirmed at (i) above. (iii) The Goods imported by M/s Bimal Paper Pvt. Ltd., Delhi under the Bills of Entry as detailed in Annexure - A to the Show Cause Notice, and collectively valued at Rs. 14,54,34,994/- are held liable for confiscation under Section 111 (d) & 111 (o) of the Customs Act, 1962. However, as the goods are not available for confiscation, no redemption fine is being imposed. (iv) I impose a penalty of Rs. 2,35,29,862/- (Rupees Two Crore thirty Five Lakh Twenty Nine Thousand Eight Hundred Sixty Two only), under Section 114A of the Customs Act, 1962 on M/s Bimal Paper Pvt. Ltd., Delhi. (v) I impose a penalty of Rs. 30,00,000/- (Rupees Thirty Lacs only), under Section 114AA of the Customs Act, 1962 on M/s Bimal Paper Pvt. Ltd., Delhi. (vi) I impose a penalty of Rs. 6....
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....t obligations. These licenses were purchased by M/s Zealous Overseas Pvt. Ltd. owned by Sharafat who manipulated them and fraudulently got wrong figures entered about the licenses in the Customs EDI system effectively showing enhanced values of each licence in the system or by entering licences which were not genuine licences at all. 5. The appellant paid a percentage of the duty payable on each bill of entry to Sharafat who, in turn, used these forged/manipulated licenses to clear the goods. 6. Shri Jain, Director of the appellant firm explained during investigation that the appellant had not bought the licenses nor has it paid Customs duty through a challan against the Bills of Entry but only paid a percentage of the duty payable to Sharafat who used the forged/manipulated scrips to clear the goods. He also accepted that M/s Zealous Overseas owned by Sharafat was not a Customs Broker and the appellant had not given any authorization to it. The goods were cleared with Kirti as the Customs Broker but the appellant had not given any authorization to it also. 7. The appellant never possessed copies of the licenses/scrips which were used to pay customs duty and, therefore, the....
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....s broker (including Kirti) to file the Bills of Entry; b) Kirti sub-let its licence to Sharafat for Rs. 25,000/- per month (which is not permissible as per the Regulations); c) The appellant had not even given any authorisation Sharafat to file the Bills of Entry; d) The appellant gave its documents to Sharafat and paid him a percentage of duty payable and Sharafat, using the CB licence sub-let to it by Kirti, filed the Bills of Entry and cleared the goods using fraudulent/manipulated licences/scrips which were issued in the name of various exporters and transferred in the name of Zealot Overseas owned by Sharafat. e) The appellant profited because it paid only a percentage of the duty payable (to Sharafat) and Kirti profited by illegally sub-letting its licence to Sharafat and Sharafat profited by collecting amounts from the appellant as duty and instead of paying duty, debiting the amounts from the fraudulent/manipulated licences/scrips. 12. A show cause notice dated 04.10.2018 was issued to the appellant seeking to recover the duty under section 28 (4) along with interest under section 28AA of the Customs Act, 1962 and also proposing to confiscate the goods under sectio....
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....ich has now been mentioned in the order-in- original. He prays that the impugned order may therefore be set aside with consequential relief to the appellant. 15. Learned authorized representative for the Revenue submits that a large scale fraud was going on in the Customs ICD, Tughlakabad of which there were two master minds - Shri Sharafat Hussain and Shri Vindo Kumar Pathror who purchased licenses and scrips from exporters under various export promotion schemes, such as, DFIA/FPS/FMS/VKGUY/DEPB. These licenses were issued to exporters which enabled them to import goods duty free. If the exporter fulfills the export obligation without making the imports under these scrips, the exporter is free to transfer licences to anybody. In other words, the licenses were freely transferable. The buyer of the licenses, in turn, can use them import goods duty free and the amount of duty payable will be debited in the licenses instead of it being paid in cash. The two kingpins, in collusion, with some officers entered wrong details of these licenses in the customs EDI system and thereby greatly enhanced the value of the scrips. Instead of using the licenses/scrips to clear imported goods, Shri ....
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.... and 5608/2011 - M/s Munjal Showa Ltd. & Ors. versus Commissioner of Customs and Central Excise (Delhi - IV) [2022 (9) TMI 1076 - Supreme Court]. The relevant paragraphs are as follows:- "9. In that view of the matter and on the principle that fraud vitiates everything and such forged/fake DEPB licenses/Scrips are void ab initio, it cannot be said that the Department acted illegally in invoking the extended period of limitation. In the facts and circumstances, the Department was absolutely justified in invoking the extended period of limitation. 10. It is also required to be noted that the moment, the appellant(s) was/were informed about the fake DEPB licenses, immediately they paid the Customs Duty, may be under protest. The Customs Duty was paid under protest to avoid any further coercive action. Be that as it may, the fact remains that the DEPB licenses/Scrips on which the exemption was availed by the appellant(s) was/were found to be forged one and, therefore, there shall be a duty liability and the same has been rightly confirmed by the Department, which has been rightly confirmed by the Tribunal as well as the High Court. 11. Now, so far as the submission on behalf of t....
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....ps issued by the DGFT are also NOT bearer instruments which can be used by anyone to claim exemption. They are issued to the licensees/scrip holder who can freely transfer them to anybody else but without such a transfer, the benefit of the exemption itself cannot be transferred. The invoices issued by the companies owned by Shri Sharafat Hussain to the appellant produced before us do not indicate that any licence/scrip was transferred to the appellant Nidhi. Consequently, Nidhi never had any licence/scrip with it nor was even aware as to the benefit available under which licence/scrip issued to whom and/or transferred who was used in the Bill of Entry was known to the appellant. The question of producing the scrip or licence at the time of clearing the goods does not arise as a consequence. As the appellant had not fulfilled the requirements of either getting the licence/scrip transferred to it or producing it at the time of clearance as required under exemption notifications, we do not find any reason to hold that the appellant is entitled to the benefit of exemption notifications even to the extent that the manipulated licence has covered part of the duty debited. ..... 32. ....
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....afat Hussain, in turn, used manipulated/forged licences to clear the Bills of Entry. In our considered view, this does not even remotely meet the requirement of caveat emptor. Under these circumstances, we find no reason to hold that the appellant was a genuine buyer of licences/scrips and had purchased them in good faith. 35. Penalty of an amount equal to the duty not paid was imposed on Nidhi under section 114A. This is a mandatory penalty imposable when a demand invoking extended period of limitation and since we have upheld the confirmation of the demand invoking extended period of limitation, we also uphold the imposition of penalty under section 114A. 36. Penalty of Rs.10,00,000 under section 112(a) (ii) and penalty of Rs. 1,00,000 under section 114AA were imposed on Jain, partner of Nidhi. The fifth proviso to section 114A reads as follows: Provided also that where any penalty has been levied under this section, no penalty shall be levied under section 112 or section 114. 37. Penalty under section 112(a) (ii) on Jain (the partner) and penalty under section 114A on Nidhi (the partnership firm) in this case arise out of the same cause of action and therefore, penalty u....
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....ointed out that various export promotion schemes such as the ones referred to above are formulated by the DGFT to encourage exports who are also issues the licenses/scrips. Whenever a new scheme is formulated by the DGFT, a corresponding exemption notification is issued under the Customs Act exempting goods which are imported using that license. The exemption from Customs duty flows from the exemption notification. It is undisputed that the exemption notifications require the importer claiming the benefit to produce the license/scrip at the time of clearance of the goods. Even if the goods are cleared through the Customs EDI System, the license/scrip has to be produced at the time of the examination of the goods and their clearance for home consumption. The appellant had not done this. Further, the appellant has not even purchased any license/scrip but only purchased the benefit of the exemption notification and this benefit is not transferable. The benefit of the exemption notification is available to a person to whom the licence is either issued or is transferred neither is the case of the appellant. 23. It is a well settled legal principal that fraud vitiates everything and nob....
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....ich act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or (b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable, - (i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater; (ii) in the case of dutiable goods, other than prohibited goods, subject to the provisions of section 114A, to a penalty not exceeding ten per cent. of the duty sought to be evaded or five thousand rupees, whichever is higher: Section 114A. Penalty for short-levy or non-levy of duty in certain cases. Where the duty has not been levied or has been short-levied or the interest has not been charged or paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful ....
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....munication of the order referred to in the first proviso or the fourth proviso shall be adjusted against the total amount due from such person. Section 114AA. Penalty for use of false and incorrect material. - If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding five times the value of goods. 26. As far as the impugned order holding the goods liable to confiscation under section 111(d) and (o) is concerned, we find that section 111(d) provides for confiscation of goods imported or attempted to be imported in contravention of any prohibition in place. There is nothing on record to show that the imported goods were prohibited and could not be imported or that they could not be imported without a licence. The entire case of the Revenue is that the goods were cleared without paying the duty but by using fraudulent or manipulated duty free licences/scrips. Therefore, confiscation of the goods under section 111(d) cannot be sustained and....