TaxTMI 
TaxTMI 
2024 (10) TMI 577
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....cordance with the provisions of the Foreign Trade Policy. The exporter M/s. Bilwa Labs had attempted to export Potassium Chloride i.e., 'Muriate of Potash', a fertilizer which is a restricted item and required a licence for export, by mis-declaring the same as 'Industrial Salt' without a valid licence, by contravening the provisions of Section 11 of the Customs Act, 1962 read with the provisions of the Foreign Trade (Development and Regulation) Act, 1992. Hence, the show-cause notice was issued to the exporter who had exported 23,601 MTs of Muriate of Potash during the period from October 2007 to May 2009 by mis-declaring the same as Industrial Salt. The Joint Director General of Foreign Trade Bangalore also issued a notice No.04/2009-10 dated 10.03.2010 alleging that the exporter M/s. Bilwa Labs had obtained the DEPB scrips by mis-declaring their export products as 'Industrial Salt' instead of 'Muriate of Potash', which was not eligible for benefit under DEPB scheme. Since, the DEPB scrips transferred to the appellant were obtained by fraudulent means, the imports made using these scrips were also not eligible for the benefit of DEPB scheme. Hence, show-cause notice was also issue....
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....573/ 12.03.2009 5,07,376/- Anjali Fincorps Bilwa Labs, B'lore. BOE - 198862 & 198863 both dtd.24.03.2009 2. 0710064203/ 17.04.2009 5,20,768/- Paras & Co Bilwa Labs, B'lore. BOE - 200831/ 24.04.2009 & 201055/27.04.2009 3. 0710064299/ 21.04.2009 6,25,680/- Paras & Co Bilwa Labs, B'lore. BOE - 201773/ 07.05.2009 4. 0710064338/ 24.04.2009 5,55,604/- Paras & Co Bilwa Labs, B'lore. BOE - 201628 & 201629 both dtd.06.05.2009 3.1 The learned counsel further submitted that the Appellant at the time of purchase of DEPB scrips from the open market, they had taken all the necessary precautions to ensure that the DEPB scrips are valid and duly issued by DGFT/Joint Director General of Foreign Trade (JDGFT) and also duly verified and registered by Customs, etc., as notified by DGFT that provides for manner of verification of DEPB scrips by the Customs. It is submitted that all the above-mentioned DEPB licenses were issued by JDGFT, Bangalore to the exporter of goods M/s. Bilwa Labs, Bangalore and contained the following details : - All the above DEPB licenses contains details of Shipping Bills under which goods were expo....
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....ll it was cancelled, all the four DEPB licenses were valid and active and were duly registered by the Customs authorities at the Port of Registration (viz., ICD Bangalore). (d) DEPB licenses are freely tradable in the market and are construed as "goods". (e) Appellant was bona fide purchaser of DEPB licenses. Appellant had exercised utmost care and precautions to ensure that the DEPB licenses were not "fake" or "forged". (f) In fact, the Customs department itself had verified and registered the DEPB licenses at the Port of Registration. Admittedly, it is only after lapse of 2 years from the dates of DEPB, the Customs department had issued a SCN dtd 27.05.2011 to Bilwa Labs (exporter) alleging export of goods by mis-declaration. As a fall out of the said SCN, even the JDGFT had issued SCN to the said exporter proposing to cancel the DEPB, which were cancelled by JDGFT only on 15.03.2012. (g) Thus, as on the dates of assessment of BoEs, the Customs department as also JDGFT had admitted and accepted that the DEPB licenses were valid, active and duly registered. (h) DEPB licenses were duly verified and registered by the Customs authorities a....
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....mands confirmed in the impugned orders are barred by limitation in as much as the extended period of limitation under proviso to Section 28(1)/28(4) of the Customs Act, 1962 is not applicable to the Appellant. The Appellant is a bona fide purchaser of DEPB licenses from the open market through traders/brokers. Further, the DEPB licenses were valid, active and duly registered by Customs at the port of Registration. The Customs Department had verified the DEPB licenses and had duly assessed Bills of Entry filed by the Appellant and cleared the imported goods. Also, there is no allegation that the Appellant was in any manner involved in misdeclaration of export goods by the exporter. Hence, the invocation of extended period was not justified. Reliance is placed on the following decisions: (a) CC v. Indian Acrylics Ltd, 2016 (336) ELT 474 (Guj.) affirming the Tribunal's decision reported in 2015 (325) ELT 753 (Tri- Ahmd.). (b) Balarpur Industries Ltd v. CCE, 2012 (275) ELT 88 (Tri-Del.). (c) CC v. Leader Valves Ltd, 2007 (218) ELT 349 (P&H) maintained by Apex Court as reported in 2008 (227) ELT A29 (SC). (d) CC v. Vallabh Design Products, 2007 (219) ....
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....rips for debiting the duty payable on the imported goods. Since, the DEPB scrips were fraudulently obtained, the adjudicating authority had rightly confirmed the demand of duty of Rs.22,09,428/- under the proviso to Section 28 of the Customs Act, 1962; interest under Section 28AA of the Customs Act, 1962 and imposed penalty of Rs.22,09,428/- under section 114A of the Customs Act, 1962. 4.1 It is submitted that in the case of Friends Trading Co. [2010 (254) ELT 652 (P&H)], the appellants imported goods against DEPB scrips. Later, it was found that DEPB scrips were obtained by producing forged bank certificate of export and realisation. The DEPB scrips were cancelled by the competent authority. Accordingly, demand of duty was confirmed after issuance of show-cause notice. The Commissioner of Customs held that any concession availed on the basis of DEPB Scrips obtained by producing forged documents could not be retained. This view was affirmed by the Tribunal. The Punjab and Haryana High Court affirmed the order of the Tribunal holding that there was no ground to interfere with the order upholding demand of duty on goods in respect of which exemption had been availed on the basis o....
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....his predecessor. If the extended period of limitation could be invoked against the original holder of fraudulent or forged DEPB, the same could be invoked against successor or purchaser. The judgments relied upon on behalf of the petitioner are distinguishable. The matter is covered by view taken by this Court earlier which has been followed by the Tribunal. Thus, we are unable to hold that any substantial question of law arises." 4.4 An appeal filed against the above order of the High Court, was dismissed by the Supreme Court [2022 (382) ELT 145 (S.C)]. The Hon'ble Supreme Court held as follows: "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/Scrips, on which the exemption benefit was availed of by the appellant(s) (as buyers of the forged/ fake DEPB licenses/Scrips) were found to be forged one and it was found that the DEPB licenses/Scrips were not issued at all. A fraud was played and the exemption benefit was availed on such forged/fake DEPB licenses/Scripps. 9. In that view of the matter and on the principle that fraud vitiates everything and such forged/....
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....ence whether fraud is committed by outrightly forging of documents or by wilful misdeclaration/misrepresentation. A fraud is a fraud and there are no categories of mild frauds and severe frauds in taxation matters. Further in a recent case of Tata Iron & Steel Co. Ltd. v. C.C., Mumbai [2015 (319) E.L.T. 546 (S.C.)] on the issue of applicability of extended period in such cases it has been held by Apex Court as follows : "[Order] - The only question in the present appeals is as to whether the customs authorities could invoke the provisions of proviso to Section 28 of the Customs Act, 1962, to avail the benefit of extended period of limitation. 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 credit under Rule 57A of the Central Excise Rules, 1944, and made willfully wrong declaration to the licensing authority to obtain the endorsement of transferability of the same while transferring the licenses to the appellant herein. In view thereof, the extended period of limitation would be available to the authorities for the purpose of c....
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....ved as follows: "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/Scrips, on which the exemption benefit was availed of by the appellant(s) (as buyers of the forged/ fake DEPB licenses/Scrips) were found to be forged one and it was found that the DEPB licenses/Scrips were not issued at all. A fraud was played and the exemption benefit was availed on such forged/fake DEPB licenses/Scripps. 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....
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.... if no fraud or collusion is found on the part of the appellant, in that event, the appellant would be entitled to the benefit of the DEPB licences/scrips. Relying on the decision in United India Insurance Company v. Lehru, (2003) 3SCC 338, Dr. Pal contends that it is just not possible for the appellant to verify the DEPB licenses/scrips which is otherwise saleable, negotiable and available in the market and which the appellant had purchased bona fide for valuable consideration and utilized it for availing of the credit against its own import, stands in the same footing as a driving licence of the driver of the vehicle as it stood in the said case. Therefore, this is an important question of law that whether in the absence of any proof of collusion or fraud or absence of bona fide on the part of the appellant, the appellant could be deprived of the credit of the DEPB licences/scrips purchased by him bona fide for valuable consideration since found to be forged. 4. The DEPB licence/scrip is admittedly a negotiable one and is available in the market. Anyone can purchase it from the market and avail of the credit out of it. This was so done by the appellant. But ultimately it....
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....urt as follows : "[Order] - The only question in the present appeals is as to whether the customs authorities could invoke the provisions of proviso to Section 28 of the Customs Act, 1962, to avail the benefit of extended period of limitation. 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 credit under Rule 57A of the Central Excise Rules, 1944, and made willfully wrong declaration to the licensing authority to obtain the endorsement of transferability of the same while transferring the licenses to the appellant herein. In view thereof, the extended period of limitation would be available to the authorities for the purpose of claiming the duty even against the appellant herein, who is the transferee of the licence in question." 9.2 In view of the above observations and settled proposition of law, it is held that demands against the appellants are not time barred. 10. So far as the argument of Shri S.K. Mehta (Advocate), with respect to on Section 28AAA(1) of the Customs Act is concerned, it is relevant to rep....