TaxTMI 
TaxTMI 
2023 (5) TMI 871
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....ch 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, Three Lakhs Only) upon Shri Ayush M Agarwal under Section 112 (a) & (b) of the Cu....
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....re 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 period is not in dispute. In fact after following due process, Customs authorities have allowed for export of the said goods. Role of Customs aut....
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....d 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 were traced refused that they had arranged delivery of the goods originating from the units of Muni Group at Bhiwandi and stated that they had merely brought two parties in contact. This shows that the goods had not originated from the units of Muni Group and the goods which are being ex....
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....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. 85 of 2007 [Tata Iron and Steel Co. Ltd. v. Commissioner- [2015 (319) ELT. 546 (S.C.)] decided on 27.04.2015 has held that:- 2. In the facts of the present case, we find that the original licence holder, namely, Indian Card Clothings Company Limited had deliberately suppressed the fact of having availed Modvat cr....
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....-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 consider before issuing the licence. Even after the issuance of the licences, the licensing authorities have not taken any steps to declare that the said licences were wrongly issued. Once the licensing authorities have held that the export product is covered under the DEPB Scheme and have issued the DEPB licence, it is not open to the Customs....
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....ho 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, and that where there has been no fraud, a buyer who has not obtained an express warranty, takes all risk of defect in the goods, unless there are circumstances beyond the mere fact of sale from which a warranty may be implied. {Bottomley v. Bannister, [1932] 1 KB 458 : Ward v. Hobbs, 4 App Cas 13}. (Latin for Lawyers)" 26. No one ought in ignorance to buy that which is the right of another. Th....
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.... 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 Act, which are in any way not applicable as they are in relation to the imported goods and not in relation to the export of goods. For contravention leading to confiscation under Section 113(d) and (i) penalty under Section 114 has been provided for. Penalty under Section 114AA has also been imposed on the appellant. 4.7 The reliance placed by learned AR on the decision in the case of Selective Minerals & Colour Indus....
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....ds, 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 the Act reads thus : "12. Penalty for improper importation of goods, etc. - Any person - (a) who, in relation to any goods, does or omits to do any act which 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....
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....re, 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 of goods as laid down under Section 111, and consequently would fall within the purview of Section 112 of the Act." 4.10 In the case of Nippon Audiotronix Ltd. [2000 (120) ELT 736 (Tri.)], following has been held:- "8. In Collector of Customs, Cochin v. Trivandrum Rubber Works Ltd. 1999 (106) E.L.T. 9 (SC), the Supreme Court had to consider whether notice issued under section 28(2) to a clearing agent was a proper notice under that section. Their Lordships took the view that notice contemplated by ....
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....ne 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 662 (Tri.-Mumbai)], following has been held:- "3. After hearing both sides and considering the material it is found - (a) The provisions regarding DEPB Scheme are contained in Paras 7.14 to 7.17 of Import-Export Policy, 1997-2002 (April, 2000 Edition). The procedure regarding applying for DEPB and obtaining credit are contained in Paras 7.38 to 7.53 of the Handbook of Procedures, Vol. 1. During the period in question, DEPB on post-export basis alone was to be granted. The provisions regarding grant of DEPB credit on p....
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....uthorities 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 that if the Customs find any variation between the description of the goods as declared on the shipping bill and as declared in terms of public notice issued by the Customs House for the same consignment they would be entitled to bring such discrepancy to the notice of the DGFT and await for further orders on the quantum of credit to be given under DEPB from DGFT." Similar view was taken by the Calcutta High Court in the case of Kanhaiya Exports v. Commissioner of Customs - 2001 (133) E.L.T. 280 with regard to verification of the documents. This decision of the Calcutt....
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....ot 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 therefore cannot be upheld. (g) The finding of the Commissioner that Rule 14 of the Foreign Trade (Regulation) Rules, 1993 especially sub-rule (2) thereof read with Section 3 of the Foreign Trade (Development and Regulation) Act, 1992 the goods should be deemed to render the export goods, prohibited goods and therefore liable for confiscation under Section 113(d) and 113(i) of the Customs Act, 1962 on consideration is found to be not correct interpretation of law. Even if the alleged misdeclaration finding is to be upheld. It is found that Foreign Trade (Regulation) Rules, 1993 issued vide Ministry....
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....ased 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 error has been committed in confirming the Customs Duty. 7. We have heard the learned counsel appearing on behalf of the respective parties at length. 8. From the judgment and order passed by the Tribunal and even from the findings recorded by the Department, it has been found that the DEPB licenses/Scripps, on which the exemption benefit was availed of by the appellant(s) (as buyers of the forged/ fake DEPB licenses/Scripps) were found to be forged one and it was found that the DEPB licenses/Scripps were not issued at all. A fraud was played and the exemption benefit was availed on such forged/fake DEPB licenses/Scripps. 9.....