TaxTMI 
TaxTMI 
2023 (5) TMI 871
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....Appellants have submitted false documents such as ARE-Is and Invoices showing the export of fabrics as procured from the actual manufacturers, for transacting the business for the purpose of Customs Act, 1962, both the Appellants have rendered themselves liable for penalty under Section 114 AA of the Customs Act, 1962. 13. Under the circumstances as discussed above. I do not find any reason to interfere with the impugned Order in original. The appeals filed by the appellants is rejected. The two appeals are disposed of accordingly." 1.2 Original authority by his order held as follows:- "ORDER i. The benefit claimed on the DEPB Scrips for duty credit of Rs.21,98,806/- by M/s. Daffodils Exports, is denied ab-initio. ii. I order the confiscation of goods of FOB Rs. 3,76,39,317/- as per Annexure "A" and which has been exported under Section 113(1) of Customs Act, 1962. As the goods are not physically available, I do not impose any redemption fine in lieu of confiscation. iii. I impose a penalty of Rs.21,98,806/- on M/s. Daffodils Exports" under Section 114A of the Customs Act, 1962. iv. I impose a penalty of Rs 3,00,000.00 (Rupees, Thr....
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....e "A" exported should not be confiscated u/s 113(i) of Customs Act, 1962 for the reasons that Invoices, and ARE-1 were fake and goods were not what were stated to be. As the goods were not what was declared, they are liable to confiscation and are not readily physically available, therefore why fine u/s 125(1) of Customs Act, 1962, should not be imposed. ii. Penalty should not be imposed on M/s. Daffodil Exports under Section 114, 114A and/or 114AA of Customs Act, 1962 for exportation of goods by means of producing the fake invoices and ARE-1 for availment of undue DEPB credit. iii. The benefit claimed on the DEPB Scrips for duty credit of Rs. 21,98,806/- should not be denied ab-initio. iv. Personal penalty should not be imposed on Shri Ayush M Agarwal Proprietor of M/s Daffodils Exports for using bogus ARE- 1s under which fraudulent exports were effected, under section 114 of the Customs Act, 1962." 3.1 I have heard Shri D.H. Nadkarni, Advocate for the appellant and Shri D.S. Maan, Deputy Commissioner, Authorised Representative for the Revenue. 3.2 Arguing for the appellant, learned counsel submits that:- Export of goods in the entire peri....
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....0. The ground that DEPB licence granted to the appellant has not been cancelled by the DGFT and was valid and legal cannot be the ground for lower imposition of penalty as held in Munjal Showa Ltd. [order dated 23.09.2022 in Civil Appeal No. 2576 of 2020 and Civil Appeal No. 5608 of 2011]. In the case of Selective Minerals & Colour Indus. P. Ltd. [2017 (349) ELT 790 (Tri.-Mumbai)] it has been held that Customs authorities are justified to denial of the claim as the appellant has submitted fake ARE-1 and central excise invoices. It is settled law that mention of wrong provision of law when the power exercised is available even though under a different provision is by itself not sufficient to invalidate the exercise of that power, as has been held in Pradyumna Steel Ltd. [1996 (82) ELT 441 (SC)]. 4.1 I have considered the impugned order along with the submissions made in appeal and during the course of arguments. 4.2 For upholding the order of the adjudicating authority, Commissioner (Appeals) has observed as follows:- "6. I observe that Appellant Nos. and 2 purchased the textiles from brokers who were found to be fictitious. The brokers who ....
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....llant No. 1, subsequent to the exports of the impugned goods had succeeded in obtaining the DEPB licence fraudulently which had the net cascading effect on the DEPB licence itself making it ab initio void. 10. From the above. I find that the invoices, ARE-1 issued were bogus / fake and the goods which were exported under the DEPB Shipping Bill were not manufactured at the addresses given in the ARE-1 by Muni Group. As such, I find that the Appellant No. 1 through Appellant No. 2 had exported the goods of FOB value amounting to Rs. 3,76,39,317/- under DEPB scheme. Further the appellants had fraudulently claimed DEPB benefit to the tune of Rs. 21.98.806- under DEPB Scheme which was not admissible to them. I also find that there is clear evidence indicating that Appellant Nos. 1 and 2 were very well aware of the fact that the goods that were exported by them were actually procured locally and not from the actual manufacturers as claimed in the various AREs. Even then they had resorted to subterfuge by misrepresenting the same were procured from the actual manufacturers. 11. I further find that Hon'ble Supreme Court in Civil Appeal Nos. 554-557 of 2005 with CA No.....
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....een issued against the export of Polypropylene filter Plates and accessories as contained in the shipping bills furnished by the petitioners. The said DEPB licences were required to be forwarded to the Customs for verification of the particulars set out in the shipping bills and necessary endorsement thereon. Under Circular No. 15/97, dated 3-6-1997 the verification by the Customs authorities was restricted to the description, quantity and FOB value of the export product set out in the Shipping Bill. It is not the case of the Customs authorities that there is any discrepancy in the description, quantity and FOB value of the export product. Under the circumstances, when the DEPB licence is issued by the Licensing authorities specifically holding that the petitioners are entitled to avail the benefit of the DEPB Scheme in respect of Polypropylene filter plates and accessories, the Customs authorities were, not justified, in rejecting the claim of the petitioners on the ground that the Articles exported by the petitioners were not covered under Chapter 39 of ITC (HS) classification. Whether an item falls under Chapter 39 of ITC classification or not is for the licensing authorities to....
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....ract 245 (Arthur L. Corbin Ed. 3d. Am. ed. 1919)] Applying the maxim, it was held that it is the bounden duty of the purchaser to make all such necessary enquiries and to ascertain all the facts relating to the property to be purchased prior to committing in any manner. 23. Caveat emptor, qui ignorare non debuit quod jus alienum emit. A maxim meaning "Let a purchaser beware; who ought not to be ignorant that he is purchasing the rights of another. Hob. 99; Broom; Co., Litl. 102 a : 3 Taunt, 439. 24. As the maxim applies, with certain specific restrictions, not only to the quality of, but also to the title to, land which is sold, the purchaser is generally bound to view the land and to enquire after and inspect the title - deeds; at his peril if he does not. 25. Upon a sale of goods the general rule with regard to their nature or quality is caveat emptor, so that in the absence of fraud, the buyer has no remedy against the seller for any defect in the goods not covered by some condition or warranty, expressed or implied. It is beyond all doubt that, by the general rules of law there is no warranty of quality arising from the bare contract of sale of goods,....
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....tten to the Joint Director, DGFT, Surat by Assistant Commissioner, SIIB (Export) to cancel the said scrips. Joint Director has till date not issued any notice to the appellant for cancellation of the said scrips nor any proceedings have been initiated. In such a situation Customs authorities could not have adjudicated upon the issue holding that the DEPB scrips were obtained by way of fraud. 4.6 Interestingly it is noticed that while the show cause notice proposes imposition of penalty under Sections 114, 114A and 114AA of the Customs Act. Order-in-original has been passed imposing penalty under Sections 114A, 114AA and Section 112(a) and (b). In the impugned order, penalty has been upheld under Section 112(a) and (b) and also under Section 114AA of the Customs Act, while holding that the goods were liable for confiscation under Section 113(d) and (i) of the Customs Act. Show cause notice specifically provided for imposition of penalty under Section 114. None of the authorities i.e. adjudicating authority or the appellate authority, have held that penalty to be imposed under the said section. On the contrary they have imposed penalty under Section 112(a) and (b) of the Customs A....
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.... by setting aside the confiscation as well as penalties imposed on both the appellants." 4.8 The order of the Tribunal is based on the actual clarification given by the Director General of Foreign Trade in the said matter. 4.9 In the case of Sanjay Agarwal [2011 (269) ELT 153 (Guj.)] Hon'ble Gujarat High Court has observed as follows:- "8. Section 111 of the Act, which provides for "Confiscation of improperly imported goods, etc." lays down the modes of importing goods brought from a place outside India which would render the goods liable to confiscation. In view of the provisions of Clause (o) thereof, any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under the Act or any other, law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer, would be liable to confiscation. Thus Section 111 of the Customs Act comes into play provided the goods are brought from a place outside India by adopting any of the modes specified thereunder so as to render the goods are liable to confiscation. 9. Section 112 of ....
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....ty as laid down thereunder. Thus, both, Section 111 and Section 112 of the Act operate in relation to improper importation of goods. 11. Coming to the facts of the present case, the respondent herein is alleged to have been involved in a transaction relating to purchase of DEPB licenses by M/s. Rajshanti Metals Ltd. Undoubtedly, the transaction relating to purchase of DEPB licences, is at a stage prior to clearance of the goods under the Customs Act. The alleged act of the respondent, therefore, cannot be said to be an act or omission pertaining to improper importation of goods. Hence, apart from the fact that there is no evidence of any direct involvement of the respondent as regards forgery of the licences, even otherwise the provisions of Section 111 and 112 of the Act would not be attracted so as to vest the Customs Authorities with the power to take action against the present respondent in connection with his alleged involvement in the purchase of the DEPB licences. Insofar as the Customs authorities are concerned, they are competent to take action against such persons who have used the forged DEPB licences to import goods, which would result in improper importation o....
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....ution of India specifically stated that no person shall be convicted of any offence except for violation of a law in force at the time of the commission of the act charged as an offence. Nor can he be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence. In view of the specific provision contained in Article 20(1) of the Constitution, no importer can be made liable to pay a penalty contemplated by Section 114A in relation to an act done prior to its coming into force. Section 114A came into statute book only with effect from 28-9-1996. Major portion of the imports were anterior to that date. In relation to such imports, no penalty as contemplated by Section 114A could be imposed. According to the Learned Counsel representing the appellant duty on all the goods imported subsequent to 28-9- 1996 comes only to Rs. 27,49,000. Penalty under section 114A in relation to such goods can also amount to Rs. 27,49,000. So, penalty imposed on the company has to be limited to Rs. 27,49,000. We do so and the impugned order modified accordingly." 4.11 In the case of Kobian ECS India P. Ltd. [2003 (157) ELT 6....
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.... Circular No. 10/97-Cus. dated 17-4-97 whereby detailed guidelines for operation of duty entitlement passbook scheme were issued. The said circular provides for the exporters to declare in the shipping bill the serial number of the export products in the public notice issued by the DGFT and the rate claimed. It was further provided that correctness of this declaration should be verified by processing the shipping bill and also at the time of examination of the goods. 2. This matter has been re-examined. It has been decided that the role of customs authorities should be confined to verification of correctness of exporter's declaration regarding description, quantity and FOB value of the export product. It will be for the licensing authorities granting credit to ensure that credit is permitted by them at the correct rate as notified by the DGFT." (d) The CEGAT in the case of M.K. Fisheries v. Commissioner of Customs - 2002 (150) E.L.T. 998 has held in Para 5 as under : "............Therefore we find that while the Customs cannot sit in judgment over any decision regarding quantum of DEPB to be credited in the passbook, yet in all fairness justice require th....
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....AMD- 3D NOW'. The item is also described as Graphic Accelator. The packing list also showed that the goods were described by the exporter as 'Graphic Accelerator Multimedia for graphic processing and video acceleration purposes for enhanced screen resolution, colour depths and refresh rate'. This description was not appearing either in the invoice or in the Shipping Bill. It, therefore, appeared that the goods were misdeclared with an attempt to claim DEPB that was not available..............." These charges, as made and how the goods constitute to be an add on card and why add on card cannot be a PCB, have not been clearly and conclusively established by giving reasons in the findings. The declaration in the Shipping Bills need not always be in technical details explaining the functions. It is not brought out in the order that the packing list was suppressed or kept away from the Customs Officers. Infact the declaration made on the Shipping Bill, as seen from Para 1 of the impugned order was 'Printed Circuit Board Double Sided (AGP Card TNT2/M84)'; which would indicate that the 'Card nature' with technical specification was indeed declared. The charge of misdeclaration th....
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....f the case, the Department was not justified in invoking the extended period of limitation. 5.1 Relying upon the decision of this Court in the case of Commissioner of Customs (Preventive) Vs. Aafloat Textiles India Private Limited and Ors., (2009) 11 SCC 18, it is submitted that as observed and held by this Court even in the case of a fraud, an inquiry was required to be made whether the appellant(s) - buyer(s) had knowledge that DEPB Scripps were forged or fake. 6. While opposing the present appeal, Shri Vikramjit Banerji, learned ASG has submitted that in the present case, admittedly the DEPB licences/Scripps purchased by the appellant(s) of which the exemption benefit was availed, are found to be forged and fake. It is submitted that, therefore, the appellant(s) being beneficiaries of such forged and fake DEPB licenses/Scripps were liable to pay the Customs Duty of which the exemption benefit was availed against such DEPB licenses/Scripps. It is submitted that as rightly observed by the High Court as well as by the Tribunal that fraud vitiates everything and therefore, such forged/fake DEPB licenses/Scripps are void ab initio. It is submitted that therefore, no....